What is Term Insurance?
Term insurance has two highlights that make it attractive:
1. A guarantee on the premium and survivor advantage for a characterized amount of years, depending on the company, age of the insured and different elements.
2. No ability to gather money inside the policy. You can’t pay an additional premium to get an additional advantage. You can’t exchange money from different records into the policy. The bearer won’t pay profits or apply interest to your record.
For what reason is Term Insurance Plan Necessary?
Life is too unpredictable and uncertainties can rip you off emotionally, financially and physically too. This is because no one has control over one’s death, neither, can anyone predict it. Death of the breadwinner of the family can cause disastrous turbulence in the family member’s life.
To find solutions to these problems, term insurance plays a vital role in your life. Moreover, term plans are an excellent way to build a financial safety net and are the simplest and most affordable type of term life insurance. It will help your family to settle your loans and pay-off certain requirements in your absence. The death benefits are paid to the beneficiary or the nominee only upon the insured’s death. Therefore, in simple words, the death benefits are zero if the insured dies after the policy is expired.
Reasons Why Term Insurance is Affordable
- It is a pure insurance plan with no investment component.
- The insurance company will pay to the nominee only in the case where the life assured dies during the policy period.
- With online purchase of term insurance, you save a lot of money on administration and other charges
How to Choose the Best Term Insurance Plan
The wide range of term insurance policies offered by insurance companies in India makes it a challenge for an individual to make a decision on the policy that will be the best suited for him/her. Not just selecting a reliable insurance company, individuals also have to make up their mind on term insurance from the wide array of term policies being offered by the same insurer. This makes it important for an individual looking for a term insurance policy to be aware of the parameters that he/she should consider so that he/she can make a well-informed decision.
The core purpose of opting for term insurance is to ensure the financial stability and security of your family in case of your unforeseen demise. Therefore, you have to make a conscious decision now, so as to provide for your family in your absence when they will need it the most. If you survive through the policy tenure, it serves as an effective investment tool for fulfilling your future plans like child’s marriage or higher education, higher education for self to improve your qualification, retirement goals, etc.
The best term insurance is one that offers the highest sum assured at the lowest possible monthly premium. This means that it is the best to start early because the younger you are, the lower will be the premium that you can avail for a high sum assured. You should keep a few essential parameters in mind to decide on your sum assured, which will be analyzed by the term insurance premium calculator to determine your monthly premium amount.
Let’s discuss the factors you must consider while selecting a term insurance premium calculator.
Decide on the coverage you are looking for: It may be difficult for you to decide on the sum assured that you believe would be sufficient to support your family in the future. However, you need to do a rough calculation of our family’s estimated future expenses for maintaining their lifestyle and also meet their liabilities. It is advisable that you aim a bit higher so that you do not fall short of the desired amount later.
Decide on the policy tenure: Insurance companies usually offer many term options of 5, 10, 15, 20, 25, 30 or more years from which you need to select judiciously as per your financial goals. The tenure that you choose will also determine the benefits that you will become eligible for. It is advisable that you opt for a term that covers you till your retirement age so that you can avail a wider range of benefits.
Make a conscious decision: There are different types of term insurance policies offered by different insurance companies in India. You need to have an in-depth knowledge of each of their features, benefits and policy terms and conditions, to be able to make an informed decision. Check on the term insurance premium calculator for the premium payable for the coverage and policy tenure of your preference. Compare the quotes minutely before choosing one.
Inflation factor: The constantly rising prices, owing to inflation, have to be considered while deciding on a term insurance plan. As a result of increasing prices, the coverage that appears to be sufficient now may not be the same after the policy reaches its maturity. There are some insurance companies that offer the flexible option of increasing your cover annually by a fixed rate of 5% or 10% to keep up with inflation. However, in such term insurance plans, the premium offered is also comparatively higher than other fixed sum assured term insurance plans.