A term insurance policy is a life insurance plan which can be taken by an individual on his or her own life. A specific tenure and sum assured are chosen under the policy. If the life insured dies during the term of the plan, the sum assured selected is paid by the insurance company to the deceased’s family. This lump sum benefit helps the family deal with their financial loss.
What is a Term Insurance Policy
A term insurance plan is basically a financial plan. The policy covers the future benefit, which is different for different products. The family needs to pay a premium every year for the coverage to kick-in. Every insurer differs in the sum assured of a term insurance policy. Some policies do not have an upper age limit while others have a “bonus sum assured” on the policy. The earlier you subscribe for a plan, the higher the premium. You need to look at the insurer’s plan carefully to choose the best one. Read about it and compare it to other term insurance products before you start subscribing to it. One does not need to pay a lot of money to buy a term insurance policy. When to Buy a Term Insurance Policy Buying a term insurance policy comes with a lot of benefits.
Why Buy a Term Insurance Policy
Most people in India do not buy insurance policies because they are not aware of its importance. Even though it is compulsory for an individual to buy life insurance from an approved insurance company, only a very small percentage actually do it. For many others, they think that buying a term insurance is very complicated and they get confused. They need to read up on the various types of term insurance policies and their associated benefits and terms and conditions to make an informed decision.
How to Buy a Term Insurance Policy
When you are buying a term insurance plan for yourself or a member of your family, take the following steps: Decide the premium payable: Having a plan in place, you can now calculate the amount that needs to be paid as a premium. This is an amount that goes towards covering the premium for the term of the plan. If the sum assured remains constant throughout the period, the premium gets paid every year. Increase your contribution: To have the right sum assured, your contribution towards the term insurance premium needs to be decided. Your premium can be as high as Rs. 30,000 in some plans, but if you have the right sum assured, that amount can be paid by your contributions for the entire term of the plan. Take a cover of Rs.
Increasing life expectancy of an individual is a good thing. However, it also brings a number of financial risks to your family members and you. If you have a permanent disability then the policy gives you and your dependents a financial support and the responsibility of managing the funds with help from the insurance company.