The market is floating with a variety of life insurance products to cater to the needs of an individual. Each life insurance product varies in the offerings of benefits, type of cover, the flexibility of plans, and the costs. Term life insurance is a cover provided to an individual for a particular time period in case of a foreseen event where the insurer dies in an accident. The insurer will provide death benefit or sum assured to the nominees or the beneficiaries if the insured dies before the expiry of the policy. The policy stands only till the period it is availed by the insured and can be extended as per the terms and conditions of the insurance company.
Term life insurance is affordable and provides cover to the loved ones of the family for a particular period, and that's the reason why most of the people prefer it. However, if someone is looking for returns from life insurance, then it might not be the best option.
There are several benefits of having a term life insurance. The thoughtfully created features of life insurance make it an ideal product for the family. The features give a variety of reasons to buy a term life insurance.
All the term life insurance products are similar in structure and operation, and pricing is one of the most important factors to choose between different policies offered by insurance companies. However, if compared with other life insurance products, term life insurance is affordable and easy to understand. The structure of the policy is easy, and it is quick to make a comparison.
In other Life insurance products like endowment policies, it has a lot of components like risk calculation, size of cash value savings, savings component, policy benefits and policy loan repayment, which makes it difficult to understand. But in term life insurance, one needs to choose only the term of the policy and pay the premium to avail the benefits.
Term life insurance can be renewed within the tenure of the policy, and there is no requirement of going through a medical test for the policy renewal. The insured can continue his policy as per the terms of the insurer and enjoy the benefits
In cash value policies, the policy has to be continued until the end of the term to receive a promised survival benefit cover. If the insured drops out of the policy in the middle of the tenure, then there is a greater loss as the savings will result in deductions by the insurer. However, in term life insurance, non-payment of the premium will directly result in the policy lapse, and there are no fines and penalties to be paid to the insurer. As the insurance provides the cover until the end of the policy with no returns, the insured can opt-out of it anytime during the policy tenure.
Insurance companies provide the policyholder with an option to change the term insurance into an endowment policy if required by the insured. There are savings benefits under endowment policy, and to avail, that policy can be converted. Parameters of conversion of the policy are time duration, tenure of the policy, amount to be converted, and cost of conversion.
Term life insurance is best for the family looking out for an affordable plan. The premium to be paid in the Term life insurance is lesser than the endowment plans, and an applicant can fix the amount of premium they are willing to pay, and the insurer will provide the cover as per the premium capacity of the applicant. The insured at the age of 25 can get a policy cover of Rs. 10 Lakh till the age of 50 by paying an annual premium of Rs. 3,500. Compared to the endowment policy for the same scenario, and it will cost between 30,000 to 50,000 per annum.
The insurance companies are obliged to provide the payout to the beneficiaries of the policy, which makes it the insurance with the fastest payout in the insurance industry. It is possible because of the simpler terms of the policy, which makes the claim process more straightforward.
Term life insurance provides a range of tax benefits to the insured and the beneficiaries. The premium paid to the insured is eligible for tax benefits under Sec 80c of the Income Tax Act. As the premiums paid to the insurer are already taxed, the sum assured received by the nominee in case of the demise of the policyholder is also exempted for any taxes.
Based on the requirements and product specifications, a term life insurance can be selected for a specified period. Upon selection, insurance can be bought either by visiting the branch of the insurance provider or by going to the official website of the insurer. The important details required to purchase the plan are listed below:
Address proof and identity proof.
Original and copy of PAN card and Aadhaar card.
Previous life insurance if any.
Details of the nominee or the beneficiary.
Identity proof of the nominee along with relationship status.
Passport size photograph.
These documents have to be presented at the time of purchasing the policy. The policy specifications, like premium amount, tenure of the policy, and other riders to be included, are to be selected. At the end of the payment of the premium amount, a provisional policy is generated, and the policy letter will be mailed to the registered address of the insured.
Buying insurance requires patience to understand the policy features and benefits as it will affect the future of the family of the insured. There are certain things that an applicant should consider before purchasing the insurance.
Years from the age of retirement from the services
Premium payments options to be considered.
Reliability of the insurance company.