You may set up innumerable financial goals in your lifetime for various objectives and calculate the ways to reach the said figure and strategize options. However, the one thing most people don’t factor in is the unpredictability of life itself. A sudden bereavement can not only upset the goals you have set but also leave your family in an abrupt financial pickle. Although there is no discernible amount to compensate for your life, a term life insurance comes as close as it gets. The best part about a term life insurance is that it provides a safety net to cushion the blow of losing a dear one.
What is Term Life Insurance?
A Term Life Insurance is a type of insurance that provides protection and coverage from death etc., for a specific period. Thus, in the event of death during the policy period, the entire insurance amount of the term plan is given to the stated nominee of the policyholder.
A term insurance plan provides no other benefits that traditional insurance plans otherwise provide. However, they do provide higher coverage for a nominal amount.
What are the advantages of Term Life Insurance?
1.Simple and Understandable
Term Life Insurance schemes are simple and lucid. It is its simplicity because of which it is gaining wide popularity in recent times. The insurance plan focuses on offering the sum that is assured at the end of your maturity period or in the event of death, to you or your dependents.
Term Life Insurance premium is extremely cost-effective and affordable. Apart from this, many online channels offer an additional discount on the timely payment of premiums. They only require that contributions are paid on time, and the policy doesn’t lapse.
The sum insured in a term life insurance has much higher coverage than the other traditional plans. ULIP based insurance plans or other endowment policies guarantee a coverage rate of around 7-10%. This means for a Rs.20,000 premium, your insurance coverage is about Rs. 2 lacs, which barely suffices for your family. On the other hand, a term life insurance policy assures around Rs. 1 crore coverage for a Rs. 10,000 premium.
The primary objective of taking a term life insurance plan is to secure your family’s future in death’s untimely event. This insurance plan receives adequate sanction within the provisions of taxation laws to guarantee tax savings and tax credit provision to advance taxpayers.
In the event of a Term Insurance Plan, the earlier you start, the lower you pay. Since the premium contributions are fixed at the time of policy buying, what you pay at the inception is what you pay till the end. Therefore, having a lower premium at the start makes it a viable option for the future.
Ultimately, one must realize that before factoring all the benefits, one must remember that the principal aim of such an insurance plan is to protect your dependents rather than saving money. Thus, the policy which assures better returns to your dependents must be considered primarily.