Life is filled with uncertainties, so it’s important for every individual to plan for their financial security of their family or loved ones in the case of any unforeseen event. The tool that offers the financial security on the behalf of any individual in the exchange of protection, safety and peace of mind to their loved ones is the ‘Term Life Plan or Insurance’.
Term life insurance policy is a cost-effective option that provides coverage for a specific period, that offers numerous advantages to policy holder and beneficiaries. This article aims to shed light on what is term life insurance and what its advantages are.
What is Term Life Insurance?
Term life insurance is a type of life insurance policy that offers coverage for a specific period of time. This insurance is designed to provide financial security for a predetermined period, like 10……30 years or it can be for more years depends on the insured’s financial preference.
For availing this policy, insurance company charge some premium amount from the insured which is based on the insured’s health, age and life expectancy, which has to be verified through the medical examination and the analysis of family medical history. The premiums are fixed and are paid by the insured for the whole duration of the term. If the insured passes away during the running policy term, the insurance company pays out to the beneficiaries.
It serves as a whole protection and is specially designed to provide financial support.
People will generally find this term plan helpful and important when it comes to long-term financial planning. While understanding this term insurance it is crucial to know that term insurance is the purest form of life insurance policy as the entire amount goes into building the life cover which is the supportive element for the family in the absence of an individual or the insured.
One of the foremost points about this policy is that it is the most affordable product of insurance in the market. To purchase an insurance policy, the insured seeks the maximum benefits which depends on the different types of term life insurance policy.
Types of Term Life Plans
Level Term Insurance: This plan is mostly opted by the individuals as it provides a fixed sum assured (death benefit) throughout the policy duration. The premium remains fixed over the period that make easier for individual to plan finances.
Term Insurance with Return of Premium: This plan is with the return on premium benefit, here, the sum of the total premium paid will be returned to the insurer if they survive the policy term.
Increasing Term Insurance: Here in this plan, the sum assured increases on annual basis usually at a predetermined rate. This plan is designed on the account of inflation and rising expenses, and the coverage keeps up with the increasing in cost of living.
Decreasing Term Insurance: As opposite to increasing term policy, the sum assured keeps decreasing every year to match the falling insurance requirements of the life insured. These plans often cover liabilities like, mortgage loans. As the policyholder age increases the liabilities get decrease, the coverage amounts also get decreases.
Convertible Term Plan: Here in this plan, it allows to convert the term insurance policy into the permanent life insurance policy (for whole life) without any need of medical examination. This plan is so flexible in nature.
Advantages of Term Life Insurance
Affordable Premiums: This is the most important feature of term life insurance as it is more affordable because it offers a coverage for a set period and provides a bigger sum assured then traditional insurance plans.
Customizable Coverage: These are highly customizable as the insured can select the term period on their own that suits their needs and their coverage amount depends on their financial responsibilities.
High Cover: It provides a higher sum assured amount, which will truly help out in the unforeseen events to the family.
Flexibility: Term plan is flexible as it can be for shorter duration (like 5…10 years) or longer duration (like 30….50 years).
Tax Benefits: Term insurance plan benefits the tax as per the Section 80 C of the Income Tax of the India Act that defines the deductions up to Rs. 1.5 Lakh per annum on the premiums from taxable income while filling your annual returns.
Convertibility: The plan offer the option of converting the policy into the permanent life insurance policies without any need of medical examination.
Conclusion
Term life insurance is a valuable tool for securing the family’s financial future in case of an unforeseen event or by losing their loved ones from the family. Its affordability, flexibility and simplicity make an attractive choice for the individual by protecting their loved ones without any commitment of premiums. I hope this article will help you out in taking your decisions to safeguard your family’s well-being and enjoy the peace of mind in any uncertainty situation.
Leave a Reply