No matter how much you try, you can never be prepared for all kinds of eventualities. As they say, hope for the best but prepare for the worst. Having an insurance policy is exactly that. You are prepared to deal with any emergency (medical or otherwise) when you invest in an insurance policy. If insured, god forbid, if you are involved in an accident or are diagnosed with a disease that requires medical attention, costing a lot of money, the insurance company comes in handy in easing the financial burden at such trying times.
Term Insurance Plan
Several insurance plans are available for people to choose from depending on their requirements. A term insurance plan is a type of life cover that provides a definite amount of coverage for a fixed period of time. These are extremely helpful to cater to the family’s needs in case of death of the insured. The sum assured or death benefit is paid to the nominee if the insured expires during the term of the policy, which is sometimes up to 35 years.
The premium for a term insurance policy is lowest compared to other life insurance policies as they don’t offer any investment option. The entire premium is used for risk coverage, wherein, if the policyholder passes away during the insured term, the nominee is paid the death benefit. However, the catch is that there is no provision for survival or maturity benefit after the policy term expires. Some plans also offer a return of the policyholder’s premiums if they survive the term.
Factors to Consider Before Investing in a Term Plan
Term insurance is one of the most basic life insurance coverage types that varies in terms and tenure from company to company. Before choosing a term insurance plan for yourself, here are some things to keep in mind –
- The reputation of the insurance company.
- What would be the ideal cover for you?
- Claim settlement ratio of various insurance companies.
- Factor inflation in payment of premium as well as coverage benefit.
- Compare terms and conditions of different insurance companies.
- Since the premium is comparatively low, if possible, opt for 2 term insurance plans from different insurance companies (helps you in case of claim rejection by either of the two)
- Find out about the conditions attached while filing for a claim.
- The minimum and maximum age to take a term insurance policy are 18 & 65 years, respectively.
- Be aware of the status of your policy in case you miss on premiums. Generally, a grace period of 15-30 days is provided.
- Find out the percent deduction in premium paid by the insurance company in case you surrender your policy.
Benefits of Term Insurance
- The financial security of a family in case of an unforeseen tragedy.
- Premium paid and claims received are exempt from income tax under section 80C and 10 (10D), respectively.
- Staggered pay-outs help provides a sense of security for families and safeguards them against liabilities.
- Reasonably priced financial safety.