If someone is looking for a pure life cover that comes with a guaranteed lump sum payment in case of an untimely demise of the policyholder, then a term insurance plan is something they must invest in. The policy guarantees a lumpsum payout up to the sum assured to the nominees with additional benefits and riders that make it the most affordable life insurance plan in the industry.
Here’s everything you need to know about a term insurance plan!
What is a term insurance plan?
A term insurance plan is a life insurance policy that does not come with a savings or maturity payout component. It’s a pure life policy that guarantees a sum assured as long as the policy is in effect and the policyholder passes away. Premiums are often lower as compared to other insurance plans, making it an ideal plan for anyone with dependents looking strictly for life cover and nothing else.
How to choose a term insurance plan?
You can use a term insurance calculator to decide on the amount of coverage you should ideally go for. Choose a plan that is at least 6 times your annual income to provide a reliable financial safety net for your family. A term insurance calculator will help you choose the amount and the premium that you would need to pay without any hassles so that you can choose your ideal cover with just a few clicks.
Who Should Buy a Term Insurance Plan?
As mentioned, it’s best suited for individuals with dependents looking strictly for a life cover to provide a financial safety net for their family. This plan is not ideal for someone who has no dependents as it doesn’t offer any savings or maturity benefits at the end of the policy period.
Benefits of a term insurance plan
A term insurance plan, even though it is a pure life cover comes with many great features in the form of additional benefits and riders which can be opted for by the policyholder.
Critical Illness Cover
This additional benefit offers the policyholder an advance cash payout if diagnosed with a critical illness from any of the listed conditions within the policy document. This lump sum payout is offered to take care of medical, and household expenses as the policyholder would often need to go through an extensive recovery process which might result in loss of income. In this way, the policy compensates the policyholder so that they don’t have to face financial hardships.
Accidental Death Benefit
In case the policyholder passes away in an accident, the nominees get an additional amount on top of the existing sum assured.
Accidental Disability Benefit
This rider pays a lump sum amount in case the policyholder is disabled due to an accident. The amount paid is a percentage of the sum assured which depends on the severity and nature of the disability.
Waiver of Premium
If the policyholder is rendered jobless or disabled and can no longer afford to pay the premiums, this rider waives off all future premiums on the policy while the policy continues as is. This is a huge benefit since the policyholder still gets continued coverage till the end of the policy term which provides a financial safety net for their dependents.
You must always opt for a term insurance plan in the early stages of your life to get the maximum benefits at the lowest premiums. The premium amount increases as you grow old, so plan your investment early on.