How Are Term Plans Beneficial to Me?

Term Insurance is the simplest form of life insurance. It is essentially a fixed-term contract between you and the insurance company. Under this contract, you pay a regular premium and the company agrees to pay a lump sum (sum assured) to your nominee, in the unfortunate event of your death within the policy period. This is life insurance in its purest form.

What Are The Benefits Of A Term Plan?

Term insurance plans are simple. They cover your life and provide financial security to your family, in case of your early demise. The payout from the plan will allow them to maintain their lifestyle, while also taking care of any liabilities that are bound to arise in the future.

Term plans promise all this, because of the following features:

1. 1. High Life Cover: One of the most important features of the term plan is that it provides a very high life cover. That is, the maximum sum assured that can be opted for is almost limitless, provided you qualify under the underwriting norms of the company. You can get a life cover of anything from Rs. 50 lakh to Rs. 5 crore- sometimes even more, based on your Human Life Value (HLV). Remember to choose a cover that will meet all your financial liabilities and allow your family to maintain their lifestyle, though.
2. 2. Low Premiums: The best thing about term plans is that their premiums are extremely low, even for the high sums assured. This also makes term plans extremely affordable. In fact, term plans are easily the cheapest form of life insurance available in the market. For example, a 28-year old non-smoking male can get a life cover of 1 crore with a 30 year term, for justRs. 576/month*. A cover like this would help you safeguard your dependents for just under Rs. 20 a day. No other plans offer such high covers at such low premiums.
3. 3. Flexible Payout Options: Another feature of the term plan is that it comes with flexible payout options. The sum assured can be paid to your nominees as either a lump sum or a lump sum with monthly installments for up to 10 years. For example, Max Life Insurance offers term plans as a Basic Life Cover, a Life Cover + Monthly Income, and a Life Cover + Increasing Monthly Income. This means that you can asses your requirements, and purchase the type of term plan you think will best meet those needs.
4. 4. Riders: Term plans also offer riders that can be purchased for an additional premium. These riders are add-on benefits that can be used to enhance the protection that term plans offer. Accidental death benefit, waiver of premium, etc. are some of the riders that can be availed with term plans.

Why Do You Need Term Insurance?

Now that you know the benefits of purchasing term life insurance, are you still wondering why you would need it? What benefits could you possibly get from term insurance? Well, here are a few situations in which a term plan could be pretty useful to you:

1. 1. If You Are The Only Earning member: In such a situation your family’s reputation could be seriously jeopardized if you were to die. They would lose their only source of income and would be unable to meet their everyday requirements. A term plan with an increasing monthly income payout would definitely be helpful in such a situation. Here, the term insurance benefits work as a pension that helps sustain the family even after the breadwinner has passed away – just like when a person who dies of old age.
2. 2. If You have a Loan: If you have a loan to pay-off, a term plan is a real must-have. The lump sum that will be paid to your nominees after your death, can help them pay-off the loan. If for example, you availed a50 lakh home loan, and you have a term plan providing a sum assured of Rs. 1 crore, it would help your family pay off the Rs. 50 lakh liability, and live off the other Rs. 50 lakhs. What’s more, if you’ve purchased the term insurance plan with the sole goal of servicing the loan in case of your death, you have the option to drop the plan once you finish paying off the loan.
3. 3. If You’re Looking To Increase Your Life Cover: If you already have have a life cover, but need to increase it so that it meets some future goal, you can avail a term plan. If, for example, you are worried about the rising education expenses that you will have to face to put your kids through school and college, and you current cover may not be enough for this, a term plan is definitely the answer. Since you can also add riders, you can increase the total coverage even more.

So, there you have it! Term insurance plans are a good idea, and it is never too late to start with them. Create a quick quote to understand what you would receive, so that you can make a well-informed decision.