Term insurance plans are the purest and the most affordable form of life insurance. Buying a term plan involves low cost and high coverage, only in case of death of the insured. In simple terms, a pure term insurance plan offers only death benefit and it is not a savings or investment product, so it does not offer any maturity or surrender benefit either.
The insurance coverage amount will be paid, to the designated beneficiary, only in case of death of the insured. No monetary benefit will be extended after the lapse of the policy.
If the insured dies during the course of the effective term plan, the nominee, as designated in the policy contract, is entitled to the sum insured as a lump sum amount benefit. The insured also has an option to convert the term plan into monthly income disbursements as a type of payout option, post the death of the insured. The monthly income payouts are optional and will be remitted in addition to the lumpsum amount disbursement by the insurance company.
The Benefit of a Term Insurance Plan
Since there is no maturity benefit, term insurance plans are the cheapest in the industry. However, it has the highest possible cover since the sum insured is usually calculated on the basis of loss of income in a household, on the death of the breadwinner of the family. The insured in this case will pay an affordable premium amount, in exchange for an insurance coverage equivalent to 10 to 20 times of his annual income. So that when he is not there, his family is taken care of, in his absence.
Who Should Buy a Term Plan?
An individual who is the only earning member of the family is the ideal customer of a term insurance plan. He, who seeks to provide income-loss benefit to his dependents, in case of an unfortunate loss of their life, is an ideal term insurance customer.
They need to buy a term plan cover for:
- Providing monetary benefits to a number of dependents
- Provide a monetary benefit to cover a loan in case of his absence
- Providing monetary benefit for child’s education, child’s marriage, etc
- Providing monetary benefits to suit the present lifestyle
Depending on your personal needs, can one decide on the insurance coverage? Because term plans are affordable, it is advisable to purchase an adequate cover for your family. The sum assured should be enough to help them sustain their lifestyle and financial goals even in your absence.
The Total Duration of a Term Life Cover
The term is used for the contract’s limited period or fixed period of the life insurance policy. You can buy a term insurance plan for a duration of 1 year and up to 81 years. With minimum entry age of 18 and expiry age of 99 years available with term insurance plans, the duration of a plan can stretch up to 81 years.
The 99 years term plans are cheaper than their whole life insurance counterparts. Thus, if you are planning to leave a legacy or fear that your liabilities may spill over your retirement 99 years plan is a good option for you.
How to Buy Term Life Insurance?
You can buy term insurance plans either online or offline through an agent. But since, it is a pure expense; that is there is no maturity value, the online option is better. Online term insurance plans offer about 20 to 30% lower premiums for the same amount of cover. Plus, claim processing for term plan is simple. Therefore, if you are not too uncomfortable managing an online policy, online mode is better for term insurance.