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Do I need Term Life Insurance?

Term insurance plans are the most basic, cost-effective and easy way to protect the financial future of your family at an affordable cost in your absence. Here are the top reasons that make term life insurance a must-have.

Term insurance is a pure life insurance plan which offers monetary benefit to the beneficiary only if the life insured dies during the policy term. Once the policy term comes to an end and the policyholder is alive, the policyholder does not receive anything and the policy terminates.

A term insurance policy not only offers financial security to your family but is also capable of fulfilling its future financial needs such as household expenditure, child's higher education, child's marriage, etc.

Among all the types of life insurance plans, term insurance offers the highest life insurance coverage for the lowest premium during the policy term. Also, popularly known as pure life insurance, term insurance offers death benefits.

Term life insurance is one of the most cost-effective ways to mitigate financial risk. Term insurance is popular because it is very much affordable, the family of the life insured gets the entire amount upon death of the insured. If one survives the policy term, the term insurance policy will not give any survival or maturity benefits. Recently, insurance providers have come up with benefits that in case the policyholder survives the policy term, the company would pay back total premiums paid.

There are a few things to keep in mind before buying term insurance. A few basic points to remember are:

  • The term insurance policy should be able to provide the family with sufficient income in case of your unfortunate death.
  • The term of the policy should cover the span that you intend to work for.

Here are a few reasons why you need a term insurance policy:

Provides financial safety net: An untimely death is unfortunate, and so are the financial liabilities that need to be carried by the family. To counter such a situation from arising, it is wise to invest in a term insurance policy that would take care of the monetary needs of the family.

Low premium: The premium for term plans are lower than any other form of life insurance plans as there is no investment element in the plan. You might have to pay a small sum of your annual income to get a life cover. Experts say that online plans are 40% cheaper than offline term plans. You skip all the intermediary charges like documentation cost, agent's commission, processing fees, etc when you buy online. The insurance provider, therefore, passes on these benefits to the policyholders. Moreover, the premium you pay for your term insurance depends on your age, sum assured and policy term. If you purchase a term plan early in your age, the rates will be comparatively lower and vice versa.

Highly flexible: Flexibility is one of the most significant advantages of a term insurance policy. You have an option to customise your term insurance policy as per your requirement. You can also buy a term policy with increasing life cover option at a pre-defined percentage increase. This helps you increase the life cover with your rising income levels.

Low claim rejection: When you purchase a term insurance policy, make sure you disclose correct facts about your current health conditions, habits, finances, medical history, etc. As per the recent mandate from IRDAI, no insurance company can claim that there has been a non-disclosure of facts post two years of term plan becoming effective. But, it is always better to provide all facts from your end to avoid any litigations in your absence.

Riders: Add-ons, also called as riders are the additional benefits that come with the term plan to meet the individual requirements of the policyholder. These riders come with a nominal fee and should be bought only if required. Some of the popular riders usually opted by policyholders are critical illness rider, accidental death benefit rider, a partial or permanent disability rider, etc. You should buy these riders only if you feel the need and should carefully go through the policy document for terms and exclusions.

Easy to buy: Buying a term insurance policy online is the easiest thing. You can compare policy features and premiums from different online comparison websites and choose a plan suitable for you. You can also visit the respective company website and buy a term insurance policy in a few easy steps and get insured. Term plans purchased online are cheaper than regular policies bought through company branches and insurance agents. A term insurance policy has got various advantages. It covers household expenses, education expenses of the family, pays debts/loans that you might take during your lifetime. It is a sensible decision to make as human life is full of uncertainties.

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