Here’s Your Ultimate Guide to Understand Term Insurance

Term insurance is one of the most common types of insurance products available in India. You have probably come across term insurance at some point if you are looking for financial security. Term insurance is designed to pay a certain amount to cover your family’s financial requirements in the event of your untimely death. 

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If you are looking for a suitable term life insurance policy to protect your family’s needs, here’s all you need to know:

What Is a Term Insurance Plan?

Term insurance is a variety of life insurance covering you for a particular period with a predetermined cover amount, called sum assured. This amount will be paid in case of the insured individual’s death during the period and if the policy is active. Additionally, there are options to attach riders for extended coverage to your base term plan, which can vary from insurer to insurer. 

Understanding How Term Insurance Works

Term insurance plans are straightforward. To help you understand, here’s a breakdown of how term insurance works. 

  • The policyholder pays the premiums and is protected for a set length of time, known as the policy period. If the policyholder dies within this period, the nominee receives the death benefit. This guaranteed sum is the amount of insurance coverage selected by the policyholder when the policy is purchased.
  • Premiums are calculated by the insurance company depending on the individual’s health, age, and life expectancy. Depending on the term insurance policy chosen, a medical checkup reviewing the person’s health and family medical history may be required.
  • If the policyholder dies before the policy’s expiration date, the insurance company will pay out the policy’s face value. A regular term life insurance policy does not provide maturity benefit.  

Key Features of Term Insurance Plans

The following are the primary features of term insurance plans that you should be aware of in order to make an informed purchase decision:

  • Term insurance policies are relatively affordable insurance products. Since they are pure protection plans, you can get coverage at lower premiums. 
  • You can choose higher coverage levels based on your needs for greater financial protection.
  • The policy coverage can be up to 30 or 35 years, giving you long-term financial security. 
  • Term insurance plans come with a variety of riders which can expand the coverage significantly. 

Term Insurance Riders

Probably, amongst the most critical benefits of term plans, riders are optional coverage features that you may add to your policy by paying extra premiums. They are available with term insurance plans and are purely optional. You can increase the scope of coverage by assessing your financial and health needs to attach the relevant riders to your term life insurance policy. 

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Notably, the availability of riders can vary from insurer to insurer. However, here are some common riders you should know about:

  • Waiver of Premium 
  • Critical Illness Rider
  • Accidental Death & Disability Rider
  • Personal Accident Cover

Who Should Buy a Term Insurance Plan?

Every person who wants to give financial stability to their family needs term insurance coverage. As a result, you should get a term plan if –

  • You are the sole earning person in your family.
  • Multiple members of the family rely on you financially.
  • You have financial goals for yourself and your family that must be met.

Why Should You Buy a Term Insurance Plan?

Wondering why you should get term insurance coverage at all? A term insurance policy is required for anyone who wishes to protect his or her family from financial stress in the event of his or her death. The policy guarantees high coverage at reasonable premiums, allowing you to choose the best level of protection. This comprehensive coverage ensures that your family is financially secure in the event of your absence. 

Hence, term insurance is a must-buy for everyone who wishes to establish a financial safety net for their loved ones to protect them under unfortunate circumstances. Most importantly, it will give you peace of mind to know your loved ones will be secure when you are no longer around.

How To Choose the Best Term Insurance Plan?

When it comes to purchasing a term life insurance policy, most policy buyers start by comparing pricing. It cannot be denied that the cost of a policy must be considered. However, it is not the only factor that should drive your purchase decision. To ensure that your family is not harmed in the future, these are the things you should be looking at:

  • Claim Settlement Ratio
  • Variety of Riders
  • Benefits of Term Plan
  • Coverage Offered

Before purchasing a plan, it is critical to understand these factors. You must also check your policy document carefully to know the inclusions and exclusions.



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