Introduction
‘Financial Security’ the term imbibes in it the complete world for many. Those who struggle to make a living and fulfil all the monthly desires, understand what it means to have financial security.
Life is unpredictably rolling fast with many things falling in the manner you don’t like. But it is not about an individual’s likes or dislikes. Destiny will leave it’s mark the way it has always. Though not completely, there are a few things that you can do to secure your life or family in the future. Talking of building security insurance, savings, fixed deposits, and pension schemes have been the common yet popular tools that help one to save for any unexpected financial crisis in life. Insurance among the options mentioned catches the maximum attention. Why?
It is because an insurance policy not only allows to build funds for the future but also provides a life protection cover to the life insured. It implies that during any or all odds, the insurance policy confirms to pay the benefit amount to the life insured or the nominee.
There are different types of life insurance policies that create financial security for you. The best out of all is the term insurance plan. Let us see why the policy makes for a suitable choice!
Table of Content.
What is Term Insurance?
Benefits of Term Insurance
Types of Term Insurance Plans
Best Term Insurance Plan in India
Conclusion
What is Term Insurance?
Term Insurance is a pure protection life insurance policy applicable for a specified duration of time. The policy provides protection after a premium is paid for the specified premium amount. If during this time, anything happens to the life insured, the nominee declared under the policy gets the sum assured as the death benefit.
The term insurance policy does not have an investment component which is why it is an affordable insurance cover. For example, a term insurance plan for Rs.1 crore can be purchased at Rs.683/per month. This amount makes it an expense of Rs.24 per day. Considering the low cost premium and high life cover, the term insurance policy gained relevance.
The popularity of the product is high. This is why you must read more about the types of life insurance policy.
Benefits of Term Insurance
These are the benefits of term insurance:
- It is a high life cover available at affordable prices.
- Term insurance pays a lump sum on the death of the life insured.
- The policy premium you pay is eligible for tax deduction.
- The term plan helps reduce financial burden like loan liabilities.
Types of Term Insurance Policy.
Planning to buy a term insurance policy is not a very complicated task. But making a choice in the type of term insurance policy needs attention. Here are the types of term insurance policies you can consider:
- Level Term Plans: This is the most basic and simple term plans in which the sum assured remains fixed sum assured throughout the policy term. Also, fixed benefits will be paid to the nominee on the death of the life insured.
- TROP (Return of Premium) Plans: This term plan comes with the maturity benefit in which the total premium paid is returned to the life insured.
- Increasing Term Plans: Under the increasing term plans, the life insured has the option to increase the sum assured on an annual basis. The premium amount will remain the same but are comparatively higher than normal.
- Decreasing Term Plans: The sum assured under the decreasing term plan continues to decrease every year. These plans are suitable when the life insured has taken a loan liability. With each year that passes by, the sum assured decreases.
- Term plan with riders: A term plan can be made wider in terms of coverage by opting for riders. To incorporate the riders in the basic term plan, a normal amount of premium is charged. Some of the accidental covers that the life insured can choose include accidental death cover, critical illness cover, etc.
- Convertible Term Plans: These types of term plans can be easily converted into different types of policies in future. For example, a term plan purchased for 30 years can be converted into an endowment plan or a whole life insurance policy. The conversion can take place only in future.
After you know the different types of term plans, next you can read about the tips to choose the best term insurance plan.
Tips to Choose the Best Term Insurance Plan.
These are the tips you can use to choose the best term insurance plan:
- Read and then Buy: Before buying the term plan, it is advisable that you read about the policy in detail. Though the cover is said to be simple and easy to understand, still you must read about it in detail.
- Compare: If you are buying the term insurance plan online, it will be best if you compare the quotes and the coverages offered by various life insurance companies. The research will also help you improve your information about the term plan.
- Consider your life stage and dependents: When you buy the term insurance policy, you must evaluate your current financial condition. You must also have an idea about the number of dependents whom you support to make for their living. After judging their financial needs, you must choose the sum assured for the term plan. If you are the sole breadwinner in the family, then choosing a high life cover is strongly recommended.
- Compare your current lifestyle with the future: It is important that you understand what your current lifestyle is. Assess the living style and compare it with the future expected cost keeping inflation in mind. Be realistic with your lifestyle needs because you are the best judge to choose the sum assured limit when it comes to keeping your loved one’s secure.
- Analyse your income: You are the best judge of your financial capacity in terms of the income level. Apart from the income, only you would know the financial responsibilities that you have to deliver. When you know the exact amount of expenditures out of your income, you will be able to invest better.
- Identify your liabilities: Taking the term insurance plan and deciding the sum assured for it is a crucial decision. Only you can identify your liabilities for which you can secure the finances through a term insurance policy. You would not want your loved ones or family to suffer to pay off the loan that you once took. Hence, choose the term plan carefully to keep the family financially protected in the future also.
Best Term Insurance Plan.
The best term insurance plan that you can think of buying is:
ABSLI DigiShield Plan:
- The insurance company promotes ABSLI DigiShield Plan as #apkeparivarkasahaara.
- The insurance type is available online. There are 10 plan options that the proposer can choose from.
- The policy provides coverage up to age 100 years.
- The term insurance plan provides a survival benefit if the policyholder survives till 60 years.
- The policy for Rs.1 crore is available at Rs.24/day for a policy term of 20 years.
Conclusion
Term insurance plan is the most affordable way to secure the future of your family financially. The insurance policy pays the nominee the death benefit after the death of the life insured. There is no investment risk which makes the policy an affordable and safe option to buy. Term plan is also a high life cover that comes at an affordable cost. For more information on term insurance plans, you can read here.