Reasons Why Term Insurance is a Must Buy?

Life is uncertain and there is none who knows what their future holds for them. To ensure that your family is financially protected even in your absence, you should choose a term insurance plan. A term insurance plan helps you in preparing for such unforeseen situations. It is the most cost-effective way to lessen the risk. A term insurance plan is a popular choice amongst insurance buyers due to low premium payments, however, the family members of the deceased get the complete amount.

In case the policyholder survives the entire policy duration, the term insurance would not provide any survival or maturity benefits. An individual needs to keep the below mentioned points in mind prior to purchasing a term insurance plan. Some of the basic points that needs to be taken care of are:

A term plan should be able to offer the family members with a sufficient income in the event of unforeseen demise.

The term plan duration should cover the time period for which the policyholder intends to work i.e. it must cover at least 65 years.

Reasons to Purchase a Term Insurance Plan

Highlighted below are the few reasons why you must purchase a term insurance plan:

1. Low Premium

As there is no element of investment involved in the insured amount, the premiums payable for all the term plans are lower as compared to any other insurance plans. Any average person may only have to pay around 1 per cent of their annual income in order to receive a life insurance cover. As this element does not exist in the insured amount, the term insurance premium is less when compared to other insurance plans.

2. Offers Financial Safety

An unforeseen demise is unfortunate and the same is the case with the financial burdens that are now needed to be borne by the family of the policyholder. To stop such a case from arising, it is an ideal option to invest in a term insurance plan that would help in taking care of the family’s financial needs.

3. Low Claim Rejection

At the time of purchasing a term insurance plan, ensure to disclose right facts regarding your health conditions, habits, finances, etc. According to the recent mandate by IRDAI (Insurance Regulatory and Development Authority of India), no insurer can make a claim that there has been non-disclosure of information post two years of the insurance plan becoming active.

4. Highly Flexible

One of the major benefits of a term insurance plan is high flexibility. A policyholder can choose any online or offline insurance plans for which the health insurance plans are not necessary. They can also change the plan and customize it as and when they need.

5. Riders

These are the additional benefits that come along with a term insurance plan in order to meet the requirements of the customer. These riders can be availed by paying a nominal fee and should be taken only when needed. The riders that can be purchased with a term insurance plan include death due to accidents, critical illness, permanent or partial disability, etc.

6. No Brokerage

Generally, a brokerage fee is referred under the charges for premium allocation, and often, it is a repetitive expense. Each time a policyholder pays a premium, a specific percentage of that payment is given towards the brokerage expenses. A brokerage usually accounts for approx. 5 to 6% of overall premium payment. However, in case, you purchase a term plan online, generally, no brokerage expenses are applied and thus you end up saving 5-6% of your money that is given towards the brokerage charges when you purchase it offline.

Conclusion

Buying a term insurance plan has various benefits. It handles expenses related to funeral and burial, covers education and other different expenses of the family members, pays off debts/loans that they may have taken in the presence of the person. Thus, it is a wise decision to purchase a term insurance plan more so seeing to the uncertainty associated with life.

You may also like to read - Should You Buy Add-Ons With a Term Insurance Plan?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.