Life is unpredictable and you cannot foretell what the future holds for you. To ensure that your loved ones are financially secured when you are not around, you can invest in a term life insurance plan.
A term plan assists you in making preparations for these kinds of uncertainties. Purchasing a term insurance plan helps you mitigate the risks, as it asks for lower premiums but delivers the entire amount of the term plan to your beneficiary.
If you survive the tenure of the policy, the term plan will not pay any survival benefits or maturity benefits. In the recent past, insurers have introduced a benefit that in case of survival, the insurance company will pay off a specific share of the total premium paid by them.
Things to keep in mind
You are required to keep some things in mind before you buy a life insurance policy. They are:
- The term plan must be able to offer an adequate amount of income if the bread-earner of the family dies.
- The term policy’s tenure must cover the time period that the individual aims to work. A term plan must cover at least 65 years.
Why you should buy a term insurance plan
Below are the reasons why you must buy a term insurance plan:
- Lower Premiums
- Provides Financial Protection
- Lower Brokerage
- Low Claim Rejection
Let’s talk about each.
As no investment element is involved in the insured amount, the insured has to pay lower premiums for all the term plans as compared to other insurance plans. Many of you might have made payments of only about one percent of your annual income, to buy a life cover for you and your loved ones. For instance, you have to pay a premium of only Rs. 7, 500 (approximately) – equal to USD 115 – per annum for a policy with a sum assured of Rs. 1 crore – equal to USD 155,000.
Provides Financial Protection
An accidental demise is disastrous; as will your financial liabilities be. Liabilities, which your family and loved ones will have to bear. In order to avoid getting into such circumstances, it is better to make an investment in a term insurance plan. A term plan would watch out for your and your family’s financial needs and requirements.
One of the key advantages of a term insurance plan is flexibility. You can choose any offline or online plan for which a health plan is not mandatory. You are provided with an option to customize your plan and change your term plan as per your requirements.
The premium allocation charges contain brokerage fees and this expense is a recurring expenditure. Every time you make a payment of the premium, some percentage is deducted as a brokerage charge, however, decreasing gradually. Brokerage charges account only for 5 to 6 percent, approximately. If you purchase a term insurance plan online, you do not have to pay any brokerage charges.
The additional benefits that accompany a term insurance plan to suit your requirements are called riders. You have to pay a nominal fee for the riders and they should be purchased if you find a particular need for them. Some of the most popular examples of riders that a policy holder buys are death due to accidents riders, critical illness riders, permanent or partial disability riders, etc. You must purchase a rider only if you need it genuinely and you must study the documents for any exclusions carefully before you buy them.
Low Claim Rejection
While buying a term insurance plan, you must ensure that you disclose the correct facts related to your health, habits, and finances, etc. According to the India’s Insurance Regulatory and Development Authority (IRDA), no insurer or insurance company can claim non-disclosure of the facts after completing two years of the policy.
Many of you, mistakenly, make a belief that insurance is a scam. This is because of the fact that the sum of the premiums you build; is lost in case you survive the tenure of the policy (for term insurance). In case of term plans that are specific to accidental death cover, you may live a long life and continue making payments for your permanent insurance premiums, whose benefits you will not receive in case of a natural death. But by believing so, you equate term insurance protection to gaming and gambling and give up the security entirely.
Of course, you do not have to bet on this – you will die one day, and nobody knows when. It could be today, tomorrow, or 30-40 years into future, but it will take place eventually. A term insurance plan safeguards your loved ones from the unknown and aids them in their difficult times when you are not around.
Still debating whether to buy a term insurance plan or not? We believe that the pros far outweigh the cons. Buy a term insurance plan for yourself.