Why Term Insurance is a Pure Risk Protection Plan?

According to experts, investing in term plans now makes more sense than ever before. The fight against COVID-19 from the past year has made us realise that investing in term plans will ensure family stability under such a circumstance. Moreover, according to a term insurance policy's primary definition only, having the correct insurance coverage in place can help policyholders protect their families in the event of any emergency. Therefore, term plans are the best option for policyholders concerned about their family and loved ones. Continue reading to find out more about the pure risk protection feature of a term insurance plan.

What is a Pure Risk Protection Cover?

A pure risk policy provides a financial safety net in the event of the life assured's premature death. So, if the life assured dies within the policy's term, the insurance company will pay the sum assured (life cover amount) to the nominee named in the policy. However, there are no reimbursements if the life assured survives the insurance period. Term insurance policies that assist the life assured's family in remaining financially secure in the event of the insured's untimely death are also known as pure death risk protection plans. 

Why Term Insurance is a Pure Risk Protection Plan?

Here are some of the reasons which explains why a term insurance plan is a pure risk protection cover. 

1. Low Premiums

The term insurance plans are cheaper than most of the life insurance plans available in the market. Hence, even those who have little savings and earrings can afford them. This is because a term insurance plan offers a pure risk cover without any investment opportunities. Only the untimely death of the life insured is covered. Thus, premiums are set to account for mortality costs only. So, only if the life assured dies during the policy period will the life insurance company pay the nominee. This is why premium rates are pretty low. 

2. High Sum Assured

You might choose a more extensive sum assured if you have higher liabilities and are willing to pay a higher premium. This way, you can rest confident that your family will be financially secure if you die unexpectedly within the insurance period. Your family will be left with a sizable corpus fund in such a circumstance, which means no more dependency or struggling to survive. Otherwise, covering monthly home expenditures, a child's education, marriage, and so on would be challenging.

Benefits of Risk Protection Cover 

A term insurance plan is an easily understandable, affordable and straightforward plan that is beneficial for individuals who are the family's breadwinners and seek a way to provide financial stability in an emergency. Moreover, you can customise your term insurance plan by choosing the coverage, policy period, and payout alternatives, such as a lump amount or an income replacement term plan. So, if your family members cannot handle a large sum of money, consider selecting a term insurance plan with an income replacement payout frequency. Furthermore, term plan riders, which are optional but paid additions under term plans, might also help you expand your coverage. Besides these, the tax deductions and exemptions can also be availed under Section 80C and 10(10D) of the Income Tax Act.

Take Away

A term insurance policy can be quite beneficial in providing a financial umbrella for your loved ones. Hence, it is essential to compare different plans and select the best policy carefully. Moreover, you can get lower premiums in online term insurance policies. So, don't delay purchasing a plan any further, as uncertainties do not come with warnings. 

You may also like to read - Unique Benefits of Buying Term Insurance Online

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.