Let’s face it. No one wants to talk about dying. But if you stop to think about it, it’s inevitable. And if you have a family, especially young children, it’s something you should think about. This is where term insurance comes in.
Term insurance is designed to protect your family from the financial burden of your death. Term insurance plans cover a specific period, such as 10 years. It does not renew automatically. If you die during the policy period, your beneficiary receives a payout.
A standard term policy is designed to cover your funeral costs and the outstanding balance of your mortgage. If your family needs additional funds, they can borrow against the policy. Your family can continue using your death benefit as a source of income or pay off your debts.
What is a Term Insurance?
Term insurance is a form of life insurance that covers you for a specific period of time, called the term. When the term ends, the policy ends. It is the most affordable form of life insurance. It doesn’t give any cash value, and its premiums don’t build up any value that can be paid out.
Term insurance is best for people who want life insurance protection for a specific time. For example, if you want life insurance while raising a young family, you can buy a 20- or 30-year term policy. You could also buy a term policy to cover you when you’re paying off your mortgage.
Term insurance can be a stepping stone to other permanent insurance, such as whole life. Term Insurance is often perceived as a product for your grandparents. But it is a useful option for many young people in their 20s and 30s.
The main reason to choose term insurance is to protect yourself against financial liability. Term insurance covers these liabilities and the death of the insured person.
How to Choose a Term Insurance
Before buying a Term Insurance Plan in India, you need to know why you must purchase one. If you’re buying a term policy because you’re a young parent who doesn’t want his or her family to be burdened with the financial responsibility of making your medical payments if you’re suddenly unable to work, then you should definitely consider a term policy.
If your health is important to you and you don’t want to lose it due to a medical condition, then you should also consider a term policy.
It’s not impossible to purchase a term policy if you’re an older person, but you’ll have to consider the same things you’d have to consider if you were younger, like your lifestyle and income.
The difference between whole life insurance and term insurance is the duration of the insurance coverage. Term insurance, as the name suggests, is for a fixed time period.
The time period can vary from one year to 10 years. The premium rates for term insurance are generally cheaper than those for whole life insurance. This is because the insurance company does not have to cover the risk of you dying during the term.
When you take out a term insurance policy, you will specify the amount you want your beneficiary to receive in the event of your death. If you die during the term, your beneficiary will receive the lump sum amount you have chosen.