Everything You Must Know About Your Term Insurance
Insurance investments are essential to financial planning. They act as a security net for all your financial needs, in both the long and short term. However, it is important to understand how insurance works before making any big investments. Here is a simple step-by-step guide to help answer all your questions related to term insurance.
What is term insurance?
Your insurance company will offer several options of term insurance plans you can choose from based on your requirements. Essentially, term insurance can be defined as an insurance investment that gives a payout to the family members of the policyholder on account of the policyholder’s death.
There can be a lot of differences in the way the individual policy works for you. You can choose from different premium amounts to different risk percentages associated with term insurance or whether it is an online term insurance policy.
Thus, it is important to understand term insurance before making a final investment.
Types of term insurance
As you know, your insurance company or insurance provider can offer you various types of term insurance plans. Here are the different plans you may have to choose from based on your insurance needs:
- Standard term insurance plans are term plans that provide life protection to the policyholder and, in case of their death, give the payout of the insurance to the family members of the policyholder. These plans are simple and the most common choice.
- Term return of premium plans are term insurance plans that return the entire amount of premium paid by the policyholder (baring tax) back to the policyholder in case that the policyholder does not die.
- Convertible term plans are term plans that are limited-term policies that are conventional but can be converted into life term plans by increasing premiums to suit your requirements.
Features of term insurance
There are many more features of the term insurance policy you must remember to consider. For instance, term insurance plans give a lump sum amount only on the completion of the clause or the term ends.
There is a specific entry and maturity age concerning each term insurance plan. You must also consider what the term policy covers, like if it is limited or covers the larger span of the insured’s lifetime, for instance, 1/3rd for education and 2/3rd for marriage and kids, and so on.
Advantages of term insurance
Several advantages are associated with term insurance plans. Firstly, it helps the financial requirements of the family of the policyholder so that they can maintain their lifestyle even through unexpected circumstances.
It also covers any loans or liabilities the policyholder might have in case of their death so that the debt is not inherited by their family members. In contrast to other general insurance plans, the premium paid for term insurance plans is often very low.
There are many more such advantages of getting a term insurance plan, like offering lower premium rates to healthy and younger individuals. It also makes sure that an income amount is provided to the nominee of the policy in the case they are unable to find income of their own if the policyholder has opted for a plan with such benefits.
Buying term insurance online
Now that you understand what term insurance plans are, here is how you can invest or buy these plans online. The first thing to do is to determine what amount of coverage is required by you. If you want a plan to have high coverage so that more money is given as payout, you must consider this beforehand.
Next, after assessing the budget, needs, and payout methods of your term insurance plan, you must find a reliable and trustworthy insurance provider. Then you can simply apply for the term plan of your choosing and start paying the premiums as required by the term plan.
Exclusions under term insurance plans
Certain cases are excluded from the payout from term insurance plans. For example, in case the policyholder’s cause of death is suicide or self-inflicted injury, there will be no insurance payout for the nominees of the insurance plan.
Moreover, policyholders whose cause of death is HIV/Aids are also not protected under most term insurance plans. Similarly, death due to overdose or drug consumption and other such drug-related accidents is also not covered under term insurance plans.