Here’s Your Quick Guide to Term Insurance Policies

Having to go through the loss is worse, but it can get worse when you are not financially healthy. One might not be able to prevent the uncertainties of life, but it is possible to start planning for such situations in advance.

A term policy can come as a helping hand for your family in that regard. It doesn’t only provide a financial cover for your family’s needs, but it can allow them to cope with loss without having to worry about the financial burden that often comes accompanied by death.

So, if you too are the bread earner of the house who doesn’t want a financial catastrophe for your family if a tragedy strikes, it’s a good idea to get a term policy.

In case you aren’t aware of the basics and features of term insurance, this article is all you need to know about it in length.

What is Term Life Insurance?

A term insurance or term policy provides financial coverage to the family of the deceased according to the sum assured/coverage chosen by the policyholder. This assured sum is applicable after regularized monthly/annual/semi-annual premiums.

Unlike a standard life insurance policy, a term policy does not come with survival benefits (Except TROP) and additional benefits. In other words, the policyholder is not subject to the returns should they survive the policy term. They’ll be only eligible for sum assured in the event of the death within the policy term; given that the death is not the result of self-inflicted wounds, suicide, drugs, and AIDS.

Key Features of Term Life Insurance:

One can go for individual or group term life insurance. In case you are opting for individual term life insurance, here are the key features.

1. The Death Benefit

All life insurance and term policies come with a death benefit. Death benefits simply mean paying out of sum assured or policy coverage in the event of the death of the policyholder. Although many terms plans only allow a one-time lump sum payout, some allow divided payout along the course.

2. Flexibility

A term policy comes with the flexibility of choosing the plan, the policy term, and premium payments. Insurers allow premium payments monthly, annually, and semi-annually basis

As for everything else, the potential policyholder can decide the plan, policy term according to their requirements and convenience.

3. Added Riders

All insurance and term policies allow the facility of choosing riders. Riders are add-on policies that the policyholders can add to their basic insurance plan against an extra premium.

For instance: Insurance policies don’t provide cover for critical illnesses such as cancer and stroke. However, if you want to be covered for such critical illnesses, you can buy an add-on cover for critical illnesses. This add-on cover will provide you coverage in case you are diagnosed with the illness.

However, you cannot get a cover after your diagnosis. Critical illness cover has a waiting period that can range between a few months to a few years, depending upon the company and term policy. During this waiting period, the insured cannot claim critical illness cover.

There are other types of additional covers, such as accidental cover, maternity cover, disability, etc. You can buy them to get extra financial protection.

4. Enhanced Cover

Generally, the premiums paid are fixed, but some insurers do provide the facility of enhanced cover. The facility allows the policyholder to enhance the policy coverage as they reach certain milestones in their life. This facility is suitable for youngsters who are just starting their careers with a limited income. They can enhance their cover as their earning capacities increase.

5. Longer-Term Periods

Term insurance has a relatively longer-term period. The minimum term period is 5 years, however, it can go up to 50-60 years or even a lifetime, depending on your choice of company and policy.

6. Highly Affordable Premiums

Unlike standard life insurance policies, term insurance offers relatively affordable premiums and higher coverage. The premiums are budget-friendly because a term policy doesn’t offer returns and other survival benefits like life insurances do.

7. Survival and Maturity Benefits

Term policy does not provide survival and maturity benefits. However, there is one kind of term policy, Term Return of Premium (TROP), where you can get back the premiums paid by you if you survive your policy term.

8. Tax Benefits

All insurance policies offer tax benefits, including a term policy. The premiums paid towards the policy in a year are tax-deductible from your income.

The Final Word

Term insurance is much simpler. You pay the premiums, and your family makes the claim and gets insured in case something happens to you.  

It’s any day better to protect your family financially than assuring yourself that you’ll be safe and sound (We wish that you will be). So, now is the time if you haven’t purchased a term policy to secure your family.