Term Insurance Policy is an Insurance that provides for life cover for a fixed period of time at a fixed rate of premiums. And if the policy holder dies before the expiry of the term of the policy death benefits are made payable to the nominee.
The policy is so designed to provide for financial backing for your family in the case of some uncertainty or death. Term insurance policy is the cheapest way to procure a substantial life cover. Term Insurance are in contrast to the permanent life insurance Polices like whole life or universal life. The term insurance policy provides a specific amount for cover for specified period of time.
Term Insurance Policy = Lower Premiums
The premiums charged for taking the Term Insurance Policy are lowest among all types of insurances policies available. The reason why the rate is lower is that the entire amount that is paid as the premium is charged to be utilised to cover the risk and there is an absence of investment component.
There are no survival or maturity benefits attached to this policy.
It is only when the insured dies that the assured sum is paid to his nominees.
Recommended Read : Types of Life Insurance Policy
How to make a Choice
There are certain facts that you need to consider before opting for a term insurance policy. It is after that you have compared the various term insurance policies and have decided the coverage and the premium that you are willing to pay you should think on other factors like the settlement ratio, online or offline term plan, goodwill of the insurance company, etc.
The premium payable varies with the Insurance companies and the term of your policy. As the tenure of your policy increases so does the sum assured. There is an eligibility criteria depending upon the age of the person who wants to take the policy, the minimum age is 18 years and maximum being 65 years of age.
Recommended Read : How to avail life insurance for senior citizens?
How do I Profit from this?
Term Policies are not-participating in nature and they don’t enable you to share in the profits of the company. But premiums paid under any kind of insurance policies are exempted from tax up to a maximum of Rs. 1 Lakh under the Income Tax laws. Therefore the claim amount or bonus that a nominee receives is tax free and tax-deferred.
In a Nutshell
Term Insurance Policy is a pure death benefit and only provides financial coverage to the insured, his or her nominee. Such financial coverage may include customer debt, dependent care, education loan for dependents, funeral costs, debts and mortgages, but this list is not exhaustive.
Term Insurance Policy is a favoured life insurance policy because it is usually less expensive, even to a smoker. This policy be very helpful if a person obtains the term policy whose tenure expires when he is near his or her retirement age as by the time that individual would retire, he would have amassed enough funds or savings to provide for his financial security.
Recommended Read : Is Life Insurance a part of Investment?
Recommended Read :
- How to select a Life Insurance Policy?
- Life Insurance for Women
- Types of Life Insurance Policy
- Why Money Back Policy is Popular Among Life Insurances?
- Advantages of Money Back Life Insurance Policy
- Why Everyone Should Take Life Insurance?
- Life Insurance without Limit of Age?
- Life Insurance for Senior Citizen
- Endowment - Life Insurance and Savings
- Is Life Insurance a Part of Investment
- What is Accelearated Death Benefit Adb?
This type of insurance policy provides full coverage for a specific period of time. When this period ends, the coverage ends too. The sum assured and the tenure is to be chosen by the person to be insured. At the time of an unforeseen situation, term insurance plan can prove to be a real support to your family.
Term insurance may have lower premiums, but when the term expires you have to ensure you renew your life insurance immediately. Imagine if you were on your way to renew your life insurance and got hit by a car… then you would not be covered and your family would be suffering.
Term insurance policy has tax exemption benefit. Plus one does not have to premium for a long time. It is beneficial for unforeseen future. It is usually a second option cause it does not cover the benefits as of the life insurance policy. The time and tenure of the term insurance policy is decided by the individual is also an advantage.