8 Features to Look for in a Term Insurance Policy
What is Term Life Insurance?
Term life insurance, sometimes known as pure life insurance, is a type of life insurance that ensures the payment of a given death benefit if the insured person dies within a certain time period. When the term life insurance policy’s term expires, the policyholder has the option of renewing it for another term, converting the policy to permanent coverage, or allowing the policy to lapse.
Features of a Term Life Insurance
Cost-effective
Term plans are one of the most affordable types of life insurance. These policies have a cheaper premium than other insurance policies since they do not have an investing component. However, since the most essential purpose is to keep your family financially safe and independent in the event of an unfortunate incident, the small cost of term insurance does not bother much.
Riders
Riders, also known as add-on benefits, extend the policy’s coverage by providing additional coverage to the insured. These riders, which are offered inside term insurance plans at an additional expense, are:
- Waiver of premium rider: If the policyholder becomes critically ill or incapacitated, this rider waives the policyholder’s need to pay any further premiums.
- Critical sickness rider: If the policyholder is diagnosed with a critical illness, the policyholder receives a lump sum payment.
- Accidental death benefit rider: If the insured dies in an accident, the term insurance payout is raised.
Pleas note that riders are not mandatory and are available at additional cost.
Payout
Keep in mind that the payout choice you select will affect your family’s financial security while you are away. So, choose the choice that best suits your nominee’s financial understanding and capabilities. A monthly income will make your nominee’s life easier, even if he or she is financially aware. This monthly income plan will assist them in maintaining their current lifestyle.
You can pick between two types of monthly income plans:
- Plan for a fixed monthly income.
- Plan to increase monthly income
In the case of a death claim, every term plan provides a lump sum benefit. There are term plans that give a staggered claim payout, in which a portion of the claim is paid out in a lump sum and the rest is paid out as a monthly or annual income.
A partial lump-sum payment can assist a family in the event of financial hardship due to the loss of a breadwinner, and the monthly income can be utilised to cover monthly obligations.
The option to select a staggered claim payout can be made at the policy’s start. Even if the life insured had chosen the option of staggered life insurance, the best term plan allows the nominees to choose the entire claim amount as a lump sum for a discounted fee.
Several insurance firms provide the best term plan, which includes the option of a lump-sum payout, monthly income, or a combination of the two. Your beneficiary will get the funds in equal monthly payments, ensuring their way of life and livelihood long after you have passed away.
Premiums payments
A shorter premium payment period means you won’t have to worry about paying your life insurance premium when you retire and your normal monthly income quits. Even after you retire, your term insurance will continue to protect your family until the policy term expires. This benefit, however, can be obtained by paying an additional fee. This is an important feature to choose since it protects your family’s financial future if any financial obligations continue after you retire.
Coverage
Term life insurance is available in a variety of quantities, from hundreds to lakhs. As firms might easily charge policyholders INR 1000 per coverage, the number of coverage desired has an impact on the size of the annual premium.
When it comes to term insurance, however, once a coverage level is chosen, it cannot be changed. However, if you can precisely anticipate the cost based on the term policy and use it to your advantage, it is not an issue. As a result, you should conduct research and get guidance from your insurer.
A term plan can be purchased in the same way t
Easy to purchase
hat clothes or books can be purchased through internet shopping. Term plans are also less complicated to purchase than other forms of investment plans and financial arrangements. A term policy’s framework is simple enough that you won’t have to worry about returns or where your money is invested. To properly apply the plan, you must calculate the affordable money based on your financial capabilities, livelihood, and financial issues such as debts, loans, and so on. A term insurance policy can be purchased in one of two ways: online or offline.
Affordable
The most appealing characteristic of a term insurance policy is its affordability. The best term plan provides life insurance for a set amount (the sum assured) and a set period of time (the policy term). The death benefits will be paid to the appointed nominee if the nominee dies or is involved in an accident with long-term consequences within the insurance period. Because the insurers are simply required to pay a death benefit, the plan is straightforward and affordable.
Some of the best term life insurance plans pay out a death benefit to the family and provide financial security in the case of the breadwinner’s death. It is also the most affordable option when compared to whole life, money back, and unit-linked insurance plans (ULIP).
Payment flexibility
The policyholder has the option of paying the payment when it is due. Annual, semi-annual, quarterly, weekly, or monthly term policies are available. Aside from ordinary plans, there are several that offer a single payment or a restricted premium choice. These are the reasons why the pay is flexible, as the policyholder can choose the payment method that best suits their financial situation.
Increasing premium payments
The cost of many term plans rises every year. In addition, all insurance companies face the issue of increased mortality charges. As a result, a perpetual term policy averages out future premiums with previous ones, allowing donors to pay annually with their preferred policy. As a result, make sure to speak with your insurer and learn everything you can about your premiums and benefits.
