A term insurance policy is a simple & straightforward life insurance plan that provides financial support and protection for your family in the event of your untimely death. It enables you to ensure that your family may continue to live their lives without the burden of debt, without lowering their level of living, and without abandoning their aspirations if you are no longer around.
A term policy provides numerous benefits, and according to financial experts, it is a wise investment to consider. However, before making this vital decision, you must be completely clear about what you want and how it will benefit you. This article answers all of your term insurance-related questions.
- What is term insurance?
Term insurance is a simple or pure life insurance policy in which the insured person’s family receives the sum assured in the case of an unexpected death of a policyholder. It is one of the most economical types of life insurance. A term plan allows you to provide financial stability for your loved ones/nominee(s) by securing a death benefit payout in the event of your untimely death. However, in exchange for this life insurance coverage, you must pay premiums to the life insurance company at a regular interval time of time as laid out in your policy.
The life insurance coverage under a term plan is only valid for a specified length of time, which is determined when the plan is purchased. This is referred to as the policy term. For instance, it could be ten, twenty, or thirty years. Furthermore, some term insurance plans may provide life insurance coverage for up to 100 years of age.
- How does Term Insurance vary from Life Insurance?
Life insurance policy is a contract in which the insurance company agrees to pay a lump sum of 2 crore term insurance or any other sum Assured amount you have chosen. If the insured dies unexpectedly or the policy matures. Alternatively, a term insurance policy is a sort of life insurance in which just the life cover benefit is given to the nominee in the event of the insured’s death, with no maturity benefits payable.
- Is there a maturity benefit in term plan insurance?
A term plan of 2 crore term insurance provides no maturity benefit. To grasp this in further detail, let’s first define the maturity benefits of life insurance. Maturity benefits are the sum assured paid by an insurance provider to the policyholder at the end of the policy period. However, term insurance plans give just protection and have no maturity advantages. As a policyholder, you must pay a defined premium amount over a set period of time. If an unfortunate incident occurs during the policy term, the nominee will receive a predetermined sum based on the plan’s terms and conditions.
- Who ought to get a term insurance plan/policy?
A 2 crore term insurance policy is required for a person who is the sole breadwinner in the family, has numerous financial obligations, and/or has taken out various loans/advances that are awaiting repayment.
- Can Term Insurance Be Claimed for Natural Death?
Yes, term insurance can be used to cover natural death. A term policy covers natural death or death from health-related circumstances. This includes medical consequences, including heart attacks and kidney failure.
The only thing to bear in mind is that pre-existing medical issues must be declared to the insurer when purchasing a term insurance policy in order for claims to be settled. In India, term insurance plans include coverage for death caused by serious disease or an accident.
- Does the term plan premium change during the policy period?
The term plan premium does not fluctuate during the insurance period. This is why it is recommended to get a term policy at a younger age, when there are no pre-existing medical conditions and life expectancy is higher, in order to lock in a lower premium.
In certain cases, the term plan premium may alter. For example, if the policyholder adopts habits such as smoking, drinking, or suffering from a handicap, the premium may be subject to adjustment.
- What Happens to Term Life Insurance If the policyholder doesn’t due during the policy term?
Typical term insurance plans in India do not include a maturity benefit. As a result, if your term insurance ends, you will not get any payment.
Why Should You Consider Buying Term Insurance?
Affordability: Term life insurance is often significantly less expensive than permanent life insurance plan, such as whole life or universal life. This is because term life insurance policy only covers you for a set length of time, but whole life insurance covers you throughout your life. This means that term life insurance premiums are significantly cheaper than those for whole life insurance policy.
Coverage for specific needs: Term life policy is suitable for those who only require coverage for a set period of time, such as when their children rely on them financially or when they have a mortgage to repay. This form of insurance is also an excellent choice for people concerned about their beneficiaries’ financial future in the event of an unexpected death.
Tax benefits: The premiums for a term life insurance policy are tax deductible, which can assist in reducing your overall tax payment. Furthermore, the death benefit given to your beneficiaries is usually tax-free that can help to enable financial security for your family or loved ones in the event that you die.
Peace of mind: Having a term life insurance policy in place can bring peace of mind for you and your family. Knowing that your loved ones would be better financially secure in the case of your death can provide peace of mind and comfort to everyone involved.
What is not covered by a term plan?
A term policy does not cover death in the following circumstances:
- Suicide occurred within the first 12 months following the policy’s issuance or reactivation.
- Death from sexually transmitted diseases, such as HIV or AIDS.
- Murder of a policyholder, either by the nominee or as a result of their criminal action.
- Alcohol or drug-induced death.
- Undisclosed smoking habits.
We have answered most of the insurance-related questions above. Now that you are equipped with the knowledge, you can easily make the choice and choose the right insurance plan for you and your loved ones.