The recent COVID-19 pandemic has made us realize that life is uncertain and that you never know when you will be facing exigencies. Which is why we need to cherish every second of our life. Because we cannot control out future, we need to look into the things that are in our hands.
If you are the sole bread winner of your family and have several people depending on you for financial needs, you can consider buying a term insurance plan. After all, even after you are gone, your family is going to need financial cushion to continue life without you and in such a situation, a term insurance plan can come in handy.
Term insurance plan is an insurance policy which offers coverage until a fixed term and in case of the policy holder’s untimely demise, the subscriber’s nominee receives the sum assured. A term plan provides a sense of stability to the insurer so that their family can be attain financial freedom even in their absence.
The only drawback of a term plan is that there are no maturity benefits available. This means that if the policy insurer is safe and healthy throughout the term plan phase and survives the tenure, he or she is not entitled to any term insurance benefits.
Some ways a term insurance is similar to other insurance policies
As referred to as ‘Pure Protection Plan’ by some insurance agencies, here is how a term plan is similar to life insurance policies:
- Just like all other life insurance policies, the coverage that is assured to the nominee of the policy holder under a term insurance plan is tax-free under Section 10 (10D). However, this is subject to certain terms and conditions.
- There are few return-of-premium term insurance policies that have a tenure of 20-30 years. In the case of such insurance plans, if the policy holder survives the policy tenure, then, like in the scenario of other life insurance plans, the policy holder receives the maturity benefit in the form of a lumpsum.
Why are term plans better than other life insurance policies?
Although there are certain similarities between a term insurance and other life insurance policies, a term plan is still a better option. Here are some of the reasons why an individual should consider buying a term insurance plan:
Monthly premium is relatively low
A person buying a term insurance plan has to pay really low premium. A premium can sometime go as low as Rs. 500. There are certain factors like age, tenure, health, etc. that go into play in deciding the monthly premium. But if you still compare the coverage a term insurance offers, the premium one has to pay is pretty low.
Financial security for those who entirely depend on you
Not only does a term insurance plan comes with premiums that don’t burn a hole in your pocket, they also help secure your family’s future in your absence. The problem with most insurance policies is that they are available at a higher premium. This is not the case with a term insurance plan. And because of this, a lot of Indians are ditching the traditional insurance policies and switching to term insurance plans.
Term insurance plans are more flexible
If you discontinue paying the premium midway of your term insurance plan, you will no longer enjoy its benefits. Your policy is simply discontinued. However, in case of traditional insurance policies, you may or may not be able to recover the amount you invested if you decide to bail out on your insurance plan midway. A term insurance plan is way more flexible than normal insurance policies as it allows you to renew the plan even after cancelling. This not the case with a traditional insurance policy plan.
These were some of the legit reasons why a term insurance plan has an upper hand over other kinds of life insurance. So if you want to secure the future of your family members and want to provide them a financial cushion, make sure that you get at term insurance plan.
Interesting related article: “What is Insurance?”