Common Facts About Term Insurance You Must Know

Purchasing one of the purest kinds of life insurance, i.e., a term insurance plan, is one of the essential financial support for anyone with a job and a family.  The right term plan will meet one of your most basic needs - your family's financial security after your death. The following article will provide you with some common facts regarding term insurance policies to assist you in selecting the best policy for yourself.

Common Facts about Term Insurance You Must Know

The following are some remarkable facts about term insurance plans in India.

1. Easy To Purchase

Term life insurance plans are easier to purchase than other kinds of life insurance policies and securities. The framework of a term plan is so basic that you won't have to worry about the plan's returns, where the money will be invested, and so on. It only involves determining the appropriate sum assured depending on your lifestyle, financial goals, debts, and other factors. You may also calculate the accurate sum assured amount using online calculators.

2. Affordable

The plan is relatively reasonable for the masses because the insurers only pay the death benefits to the beneficiary if the life assured dies within the policy term. Furthermore, compared to other life insurance products such as unit-linked insurance policies, whole life plans or money back plans, a term plan's premium is the least expensive. It must be noted that the term plan's premium includes both death charges and the cost of basic policy maintenance.

3. Variety in Payout Frequency 

All term plans provide a lump sum payout to the nominee in the event of a death claim. Additionally, a partial lump-sum payment option is available. A portion of the death benefits is paid in a lump sum, while the remainder might be distributed monthly or annually. The remaining sum will be paid out in monthly instalments, assisting the family in overcoming the financial difficulties brought on by the death of an earning member.

4. Return of Premiums

Since a pure term insurance plan does not offer maturity benefits, some people are apprehensive to invest in them. However, if the life assured lives to the end of the policy term, a term plan known as a term plan with a return of premium gives a maturity benefit equal to the return of premium instalments. These plans, however, are significantly more expensive than standard term insurance policies since they provide both death and maturity payouts, depending on which event occurs first. In addition, the maturity payments of a term insurance plan with premium returns varies between insurance companies. 

Take Away

It's vital to be aware of your financial needs and select a term plan with an appropriate sum assured. You can also choose the right policy for your needs, budget, and financial goals if you understand the basic components of a term insurance plan. Furthermore, term insurance policies obtained at a young age are thought to be the best financial move you can make because they will assist you in achieving larger financial goals by relieving you of additional financial concerns.

Also read -

Financial Planning Guide – Investment Or Insurance Which One You Should Opt For?

How to Search for the Best 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.