Monday, 28 November 2016

Seven must know facts about term insurance plan

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The term insurance plan is a pure life insurance plan which gives you an option of buying life insurance in the most economical way. It is also known as a pure life insurance plan because it provides cover against death only, without any investment and saving component. There are multiple benefits and features associated with a term insurance plan. But still, many of us may not be aware of these facts about a term insurance plan. So, let’s look at seven must know facts about a term insurance policy.

1. Most economical way to get a life insurance: In comparison to other traditional life insurance, a plain vanilla term insurance plan is the most economical way to get a life insurance. You can get sum insured of Rs 1 crore at a nominal premium.

2. You can get your premiums back on maturity: The major reason why people don’t buy a term insurance policy is because there is no return upon survival or no maturity value. If the insured person survives the policy term, he gets no return as it does not inculcate the elements of saving and investment.

3. Option of convertibility and riders: Our need is not always the same. With changing circumstances, our needs also change. To fulfill the changing needs of the insured person, term insurance plan comes with an option of convertibility. This convertibility feature of term insurance plan gives you an option to convert your existing term insurance plan into a permanent life insurance plan during the policy term or at the completion of the policy term.

4. Receive death benefit as monthly income: If you don’t wish that the death benefit should be paid at once as a lump sum amount to the nominee, there is another alternative for you. You can choose to spread out the policy sum assured as monthly income at the policy inception as it might be difficult for the family members to handle, utilize and invest the whole amount payable on a claim.

5. Buying online is easy and cost-effective: Buying a term insurance policy online has a lot of advantages over an offline purchase of a term plan. Online term insurance policies have the major advantage of cost effectiveness, as online term insurance doesn’t involve the cost of an intermediary commission.

6. Cover enhancement: During the policy term in a term insurance plan, you have the option to increase your cover or sum assured at milestone stages of your life like marriage, childbirth, etc. The percentage of increase in cover varies from company to company and plan to plan.

7. You can choose your policy term & premium payment term: Term insurance policy gives you the option to choose the tenure/term of the plan like 15,20 or 30 years as per your future financial requirements and obligations. You don’t need to pay premiums for your whole life. You can also choose a term insurance policy which offers a single pay ((pay a premium once and get coverage throughout the policy)or limited pay option (pay a premium for the selected policy term and get coverage throughout the policy).

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