Do You Have A Loan? Learn Why Term Insurance Is The Best Option For You.
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However, there might be a situation in which you are unable to pay your loan back. The last thing you’d want is your family facing the burden of an unpaid loan. To avoid such an issue, having an insurance plan can give you the required security. Contrary to some beliefs, a term plan is a great option for securing your loan.
Term Insurance As Loan Security
A term plan is the most basic form of life insurance yet it is considered as the best life insurance plan by many. It is for a specific time period and is a pure insurance product with no savings or investment component. It provides a large sum assured at a low premium rate. In the event of your death within the policy term, your term insurance will give the sum assured to your family or nominees, taking the financial burden off their shoulders. If you outlive the policy term, you can simply renew your policy and continue to enjoy the security cover. Nowadays, term plans even come with a Return of Premium option which essentially makes them savings plans too. It thus makes a lot of sense to use a term insurance plan as a loan security and help your family tide over emergencies.
Payouts And Loan Repayment
Choosing a suitable payout option for your term insurance is one of the key steps while buying a plan. You can choose to either receive the sum assured or death benefit as a one-time lump sum payment or as staggered payouts. If you choose a lump sum payment, your nominee will receive the whole amount at once and the policy gets completed. In the other case, the money is paid to them in small installments at regular intervals.
Conclusion
The best insurance plan is undoubtedly going to be the one that takes all of your and your family’s needs into account. Make sure it is comprehensive enough to be able to secure your loan.
Do read - India's Long-Term Investment Plans
