Is It Worth It To Buy A Short-Term Insurance Policy?
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Different from usual annual typical policy, a term plan offers a high cover amount and is usually seen as an investment on behalf of your loved ones. Term insurance involves payment of nominal premiums which is paid for a specific period within which if any misfortunate event takes place, your family/nominee will be entitled to receive a large amount also known as insurance cover or sum assured.
What About Short-term Insurance Policy?
While a term plan is amongst the simplest forms of life insurance, a short-term insurance is a further bifurcation based on the tenure. While it is advisable to take a term insurance which insures till your earning age, preferably upto 60, you can choose a short-term insurance policy which can be between 5-25 years long. A short-term insurance policy is taken by the buyers to meet temporary needs. The major difference between a short-term and long-term insurance policy is the contract term.
Features Of Short-Term Insurance Policy
Let us learn about key short-term insurance policy features:
- Premium can be changed: Unlike long-term insurance where you can lock-In the premium amount to be paid throughout, premium in short-term insurance can be changed based upon your preference. Premium amount can be increased or decreased considering several factors such as earning, tenancy, disbursals, mortality and so on.
- Renewable in nature: Shrugging off a myth that short-term insurance policies can’t be renewed, whether you take a 20-year policy or a 30-year one, you can renew your term insurance any time. With this facility, you can pay the same premium and enjoy the benefits which were first promised.
- Tax Benefits: Term insurance entices the consumers mainly because of its tax savings. Though experts advise that tax saving shouldn’t be the reason for people to purchase term insurance, many people do so keeping Section 80C of the Income Act in mind which provides tax benefits on premiums paid and sum assured from taxation.
- Death Benefit: If the person insured dies, the assured sum is allocated to the nominee. Based upon the insurance plans, the amount may differ. Furthermore, the assured sum can be availed in many ways: lump sum payment, partial lump sum amount, yearly, quarterly, monthly and so on.
- Additional Rider Benefit: Perhaps the most underrated feature of short-term insurance is the additional rider benefit. Riders simply make your insurance stronger and help you get additional coverage. These riders cover everything from disability and critical illness to income benefit and premium waiver.
- No Survival Benefits: While additional rider benefit is amongst the most impressive term insurance features, no survival benefit is what turns the consumer’s heads away from this product. However, most people fail to understand that term insurance is specifically designed to cover for short-term and that’s the reason why it has a low premium, so to make it viable when it comes to safeguarding your family’s interest.
For people at different stages in their life, term insurance has become a necessity regardless of their age and gender. Due to its pure protection nature, term insurance is not viewed as an investment plan as the premiums are simply used to cover the risk.
Conclusion
To determine the right protection amount, use the term insurance premium calculator. Within seconds, you can get the perfect quote required to safeguard your family. The sooner you fill the form, the quicker you get to know about the amount. After all, life’s all about protecting what’s most important to you and that’s your loved ones.
Also read- What Are The Different Investment Types In India?
