Advantage of term insurance over other types of life insurance

Many people have invested in investment plans with the high premium which gives certain benefits and a lump sum amount on the death of policyholders or completion of the policy term. But is it sufficient to invest in an endowment plan which gives good insurance cover with investment return? Not at all, because the plan does not offer full financial security to the family members or children on the premature death of the policyholder. LIFE INSURANCE The main purpose of life insurance is to offer financial security with unique benefits and to fulfill future financial requirements to the nominees on the death of the policyholder. FINANCIAL SECURITY Life insurance policies provide the advantages in case of premature death of the insured to look after the family's financial needs, which is not offered by mutual funds or fixed deposits. A high amount of sum assured in a term insurance policy is necessary to provide financial security. TERM INSURANCE PLANS An affordable, life insurance plan that provides payout benefits only in case of insured dies during the policy term is called Term Insurance Plan. They are also known as Pure Protection Plans since they do not provide any benefits on maturity. TERM PLAN IS DIFFERENT FROM OTHER LIFE INSURANCE PLAN Term insurance plans are a part and parcel of life insurance plans. When we talk about the similarities between all the other plans, it is observed that all plans provide common benefits under the Income Tax Act. Let us find out what makes the term insurance plans altogether unique.

1. Affordability: 

 Comparatively, the premium on term plans is very less and it is affordable to get sufficient financial security to the family on the loss of the policyholder. As compared to the other insurance plans, the endowment policies carry a higher cost of the premium.

2. Coverage: 

Generally, a minimum life insurance cover is necessary to avail of the financial benefits in case of other plans. While in the case of term plans, there is no fixed minimum limit of life insurance cover.

3. High sum assured: 

Term insurance offers comparatively high assured amount while other insurance plans may offer guaranteed returns, money back, or life-long annuities

4. No saving component:

Usually, all the endowment plans offer payout either on the death of the policyholder or completion of the policy term. On the other hand, the term plan does not have such a saving component since there is no payout in case of maturity. The term plan only provides the benefit of payout in case of death of the policyholder, that too, during the term of the policy. CONCLUSION After going through all the advantages point-wise and understanding the disadvantages of term plans and other insurance plans, it is better to buy term insurance plans to get the maximum payout on the sum assured.