Term Insurance In today’s era, people are being tempted with different ways of investing money. Before you take any financial decision, it is important that you calculate your needs correctly.
If there is any discrepancy in this calculation then the investment decision may be wrong.
Therefore, it is better to take the investment decision keeping in mind many important things of the account.
People make the mistake of investing in tax saving schemes quickly just to save tax. They do not take into account the risk coverage and insurance requirements at the time of investment. Hence, it is very important to pay attention to them as life insurance is more important than tax benefits.
What is Term Insurance?
Term insurance, a type of life insurance, provides coverage for a period of time or years. If the insured dies during the policy term then the death benefit (or Sum Assured) is paid. No payment is made, if the term insured lasts the tenure.
The purpose of taking life insurance is to provide life cover to the policyholder and financial security for their family.
One can take life insurance in two ways:
1. Opting for pure life cover, also called term insurance
2. Taking a life cover with a savings component, also known as endowment insurance
Term insurance is an insurance that provides coverage for a limited period of time at a fixed rate payment. When this period is over, the premium on the old price is not guaranteed, and the insurer must give up the coverage. If the life insured dies, the death benefit will be paid to the beneficiary.
Some of the key features that make a term plan indispensable are
Why is term insurance better?
Term plans provide pure life cover. This means there is no savings/benefits component. They are basic plans which make life insurance a more affordable option- Other options It is possible for the policyholder to choose a larger life cover at a lower premium as compared to a similar endowment plan.
Premium Term Insurance Plan-
Most of the insurance companies in India offer term insurance. Term plans do not have any maturity value, so people opt for term insurance by looking for plans with low premiums. From an investment point of view, the premium amount is an important factor and should not be the main reason for making an investment decision.
Key Features of Term Insurance :-
1. Large Life Cover :-
Since term life insurance plans are more affordable, it is possible for an individual to choose a higher life cover for the same premium as an endowment plan. For example, one can get a term plan with a cover of Rs 1 crore for a tenure of 30 years by paying a premium of 30 years.
An endowment plan of Rs 1 crore would be out of bounds for most 30 year olds. However, it is relatively more viable to take a term plan for a similar cover.
Policyholders can attach riders to the term plan, which can increase the usefulness of the policy. So by opting for a critical illness rider or critical illness plan, for example, he is entitled to receive the sum assured on diagnosis of critical illness.
This is in addition to the death benefit of an equal amount on death over the term of the policy. There are other riders such as – employment cover, disability cover, waiver of premium cover, among others – damages. The policyholder should select the rider based on his/her specific needs to make life insurance more suitable and worthwhile.
3. Enhanced Cover:-
Some insurance companies offer the flexibility to increase the life cover during critical stages of the policyholder’s life. For example, the policyholder has to increase the life cover by 50% at the time of marriage and 25% at the time of change of parents. has been permitted. This makes it possible to start with a modest cover and then increase the liability as well as the ability to pay higher premiums.
4. Inovative Features (Innovative Features):-
Although insurance companies are generally quick to innovate, they are the most innovative with respect to term plans. For example, companies have been quick and proactive in cutting premium rates, though also offering additional discounts in certain categories such as non-smokers.
Buying a term plan is now quite convenient thanks to the Internet. It is possible for a healthy person, as defined by the insurer, to buy a term plan over the Internet without having to undergo any medical examination.
Things to keep in mind while taking a term insurance plan:-
There is a perception among people that insurance is needed only by married people. The fact is that life insurance is a must for everyone on whom one is financially dependent.
You need life insurance even if you are not married but your parents are dependent on you. Term insurance should be taken at the age of about 30 years. If the age is less then the premium amount will also be less.