How Does A 20 Year Term Life Insurance Policy Work
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Life can change tracks any minute, hurling us to a new destination, a destination for which we might often be unprepared. A term life insurance policy can help us prepare for such changes, allowing us to continue with our lives regardless of how things change. A 20 year term insurance policy offers protection for 2 decades, acting as a safety net that offers comfort in an ever changing world.
Features and Benefits of 20 Year Term Life Insurance Policy
Some of the features and benefits of a 20 year term life insurance policy are mentioned below.
- Extended cover: Policyholders are covered for a period of 20 years, ensuring they can continue their normal lifestyle without having to worry about themselves during this period.
- Death benefit: In the event of unfortunate demise of a policyholder during the term period, his/her nominee will receive a death benefit. This death benefit depends on the premium paid and is traditionally higher than regular life insurance policies.
- Income Tax benefit: Individuals are entitled to income tax benefits under Section 80C of the Income Tax Act, helping them save tax.
- Surrender benefit: Policyholders can get surrender benefits if they choose to surrender their policies before maturity.
- Additional riders: A policyholder can customise his/her policy by adding additional riders, enhancing overall protection.
- Low premiums: The premium for 20 year policies is generally lower compared to other short term periods. These premiums can be paid without burdening a policyholder.
- Premium paying modes: Most providers offer flexible premium payment terms to policyholders.
- Loans: Certain insurance providers offer loans against term life insurance policies.
Who Is This Plan Suited For?
Individuals who wish to spend the next 20 years of their life without tension should opt for this plan. It is ideal for those who might retire during this period or those who are expecting certain changes in their lifestyle during this period. Individuals with marriage/educational commitments of their children can opt for this plan, given the great benefits one is entitled to. Individuals who cannot afford premiums for a permanent life insurance policy could opt for a 20 year term life insurance plan. It is generally not suited to youngsters who have no foreseeable problem in the future or those who have just embarked on a new journey of financial independence.
How Does This Plan Work?
The working of this plan is simple and straightforward. Individuals who purchase this scheme are entitled to protection during the tenure of this policy, i.e. 20 years. In the event of a policyholder passing away during this period, his/her nominee will receive a death benefit. The policy is active as long as premiums are paid. In the event of an individual passing away after the policy matures, no benefit will be paid. There will be no maturity benefit either, if a policyholder survives for the entire period of this policy.
Conclusion
Premiums for a particular policy might change from time to time, depending on the company which insures an individual. Certain policies have fixed premium amounts and an individual is expected to check with the service provider before choosing a policy.
Also read: How Many Term Insurance Can I Buy In India
