A term insurance plan is immensely beneficial for an individual. Especially if you have people depending on you financially, these are the only plans designed to protect your family in difficult times. It covers critical illness and offers security in the event of loss of life.
How does a term insurance plan differ from a life insurance plan?
A term insurance plan only offers coverage for a specified term, unlike a life insurance plan. If the policyholder expires during the term of the plan, the insurance company provides the sum assured to the beneficiary. This is the basic idea behind a term insurance plan.
There are a few more features of a term insurance plan you must know to make an informed choice:
- Low premiums: Since a term insurance plan offers coverage for a specified period, the premium amount is lower than a life insurance plan. It does not provide any maturity benefit, so it does not take the form of savings with interest. Thus, the term insurance plans ask for a low investment from you as a premium. However, every insurance policy differs from the other, and you can make a term plan comparison online. If you choose multiple add-ons, your premium amount can increase significantly. So, if you are on a budget, you can choose a term insurance plan with fewer add-ons. Term insurance offers you the benefit of choosing add-ons during your renewal.
- Survival Benefit: A term insurance policy does not offer any survival or maturity benefits. If you survive the term of the insurance plan, you don’t receive any no claim bonus or maturity sum. However, some insurance companies offer the option of TROP. A TROP is a term plan with an option of return of premium. This means that when your policy matures, and there is no claim made, you are returned all the premium that you have paid over the years. So, you don’t feel like your money has been invested wastefully in a term insurance plan. This is an add-on benefit which you can choose for an additional amount to your premium.
- Flexibility: There is a wide range of online term insurance plans offering you various benefits and facilities from top insurance companies. You have the liberty to choose any which fit all your requirements. A term insurance policy in itself is very flexible, and you can make a term plan comparison to know more. You can choose various add-on benefits for a higher premium amount. These add-on benefits will offer you wholesome coverage. Term insurance plans also offer the benefit of covering your spouse’s life. The options of customising your term insurance plan are simply endless.
- Duration: There is a myth surrounding term insurance that it is only for people choosing a term up to 25 years. A term insurance plan holds no such clause. You can choose a term insurance plan for a maximum of 99 years. In such a case, if you lose your life to old age or natural causes, the insurance company will still cover it. It will offer the sum assured to the beneficiary listed in your policy document.
- Payout Options: An online term insurance plan offers you the flexibility to choose the policy’s payout options. If you expire during the term, a lump sum amount will be offered to your family. Now they have the burden to decide how to invest the money to get a stable life from it. You can do this for them. You get the option of choosing a monthly payout option. Through this feature, your family will receive a monthly amount for their sustenance along with a lump sum money.
- Premium Payment Flexibility: A term insurance plan gives you the flexibility to pay your premium according to your timeline. If your term exceeds your retirement age, you can choose to pay larger amounts as premiums in the first years. This feature will allow you to enjoy coverage after your retirement without paying any yearly premium.
- Convertible: Some insurance companies allow you to convert your term insurance plan to an endowment or whole life insurance policy. You can choose to make this conversion at any time throughout the policy tenure by paying a minimum to zero additional fees.
A term insurance policy is a great way to secure your family’s financial health and happiness.