Term Insurance and the Common Facts One Should Know

  • Term Insurance Articles

Term Insurance plans are pure protection plans designed to protect your family's financial future arising out of an unforeseen circumstance due to your sudden death. Term insurance is the most recommended life insurance plan as securing the financial future of our families is the most important goals of our lives. The premium you pay for the term insurance is cheapest among all life insurance plans as there are no fringe benefits attached to it excepting the life cover. Therefore, you can buy a big life cover by paying a small premium.

If this scenario scares you (and well it should), it is time to consider investing in a good term insurance plan for your family's future. However, deciding to do so is only half the job well done. The rest of the task involves picking the right plan that will meet your family's every future need.

Let us know the type of term insurance plans available and the benefits attached to it.

Level Term Plans

This is the simplest form of term insurance plan where the sum assured do not change during the policy tenure. Upon death of the policy holder the benefit is paid to the nominee.

Return of Premium Plans

Unlike level term plans, the premiums are returned to the policy holder if he or she survives till end of the policy term.

Increasing Term Plans

In this plan, you can opt to increase the sum assured at annual frequency at a rate of 5% or 10% during the plan term even though the premiums remain same. This helps your life cover pace with your growing liabilities.

Decreasing Term Plans

Decreasing term insurance is opposite of the increasing term plan. The sum assured decreases yearly at a fixed rate matching your decreasing insurance needs. These plans are suitable in case you have taken a home loan or personal loan.

Have adequate cover for medical expenses

With age come various critical ailments. It might be difficult for you to pay huge hospital bills or meet expenses while recovering at home. Buying a good Mediclaim plan for self and spouse at an early age at cheap premium makes sense. Over and above that, you must also buy a health insurance plan covering all major critical illnesses.

Term Plans with Riders

This unique plan lets you buy riders like critical illness cover, accidental death cover or disability cover etc. by charging a small additional premium. If you take a rider and opt for premium waiver benefit, then paying future premiums will be waived in case of the eventualities for which you had taken the rider.

Now that you know that term insurance premium is the cheapest and also the various types of term insurance, let us discuss how much term insurance cover one should take?

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