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How Buying Term Insurance Will Secure Your Family

Janhavi Shinde Janhavi Shinde 15 January 2019

Family’s love is the most important thing in the entire world. Learn the way you can yet nurture this love in your absence, through this 2 minutes read by availing a term insurance policy.

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Insurance is the need of the hour in today’s world of uncertainty. It helps you to plan effectively and efficiently for the financial future of your family and loved ones in your absence. Availing a term insurance plan will benefit the family of the bread earner from the sudden financial loss they might face in the event of an untimely death. So, it is always recommended to buy the best term insurance policy to safeguard the future of loved ones. Now this was a brief bio about term insurance plan.

Let’s highlight few other important things that will help you understand term insurance in a better way. It is said that medical tests are the most important and crucial steps before the insurer actually approves your term insurance plan. Let’s see how…

Why Medical Test is Important in Term Insurance?

A medical test is the most important part while buying a term insurance policy but many insurance companies project that they offer term insurance plans without any medical test. But it’s a myth, the truth is it’s a trap and marketing gimmick used by the insurance companies to capture the attention of prospective buyers.

A medical test must always be availed while buying term insurance plans because if you fail to undertake them it will lead to:

  • Higher Premium Amount

  • Higher Claim Rejection Probability

  • Less Insurance coverage

So it is highly recommended to opt for a medical check-up while buying a term insurance plan and disclose your health quotient to the insurance company.

That was all about medical tests.

Let’s now find out about the renewal of term insurance plan…

Why Renewal of the Term Insurance Policy is Important?

A term insurance policy is a financial backup for securing the future of your family so it is very important to renew the policy regularly. Renewing the term insurance plan is a way by which you extend the features and benefits of the term insurance plan. Failing to renew your term insurance plan can cost certain disadvantages as under:

  • Failure in renewal of term insurance policy within the time limit will cost in losing the insurance coverage.

  • Failure to renew the policy within the stipulated time frame will cost you in paying extra money as you will have to pay additional interest along with the premium amount.

  • Another major disadvantage of failure in renewing the term insurance is that you will not be eligible for tax benefit. The tax benefit is not available on lapsed term insurance plans.

Thus, renewing your term insurance policy within the stipulated time frame is very important in order to continue enjoying the benefits of your term insurance plan.

But, people often get confused whether to opt for a term insurance plan or a traditional life insurance plan. Why is that so?

What exactly is the difference between these two?

Let’s take you through them right now.

Term Insurance v/s Traditional Life Insurance: Benefits Compared

Availing an Insurance coverage is very important in today’s world of uncertainty but choosing between term insurance plans v/s traditional life insurance plans is one of the most difficult tasks. Here is a complete guide that will help you understand the benefits offered by term insurance plans and traditional life insurance plans.

  • Benefit

Term insurance come with death benefit while traditional life insurance plan comes with death benefit and maturity benefit. So, for people who are looking for dual benefits usually opt for a traditional life insurance plan. But the most important benefit of buying a term insurance plan is that the plan offers a higher sum assured at a low premium amount. So it is advisable to realign your financial goals to at least include one term insurance plan in the basket of your investment as it provides higher financial security at minimum costs

  • Investment motive

Both the insurance plans offer different investment motives. The traditional life insurance plans are designed to promote savings while the term insurance plans motives to offer risk coverage at minimum cost.

  • Premiums

The premiums of the traditional life insurance policies are higher as compared to the term insurance plans as they offer both maturity benefit and death benefit. On the other hand, term insurance plans offer only the death benefit, so it tends to be more affordable. Thus, above is the comparison between a few of the most important benefits offered by term insurance plans v/s traditional life insurance plan.

How to Lower Term Insurance Premium Rates?

While buying a term insurance policy you generally carry an in-depth comparison on the basis of features and benefits that the term insurance policy is offering and you usually have purchased the term insurance plan as per the premium rates that are applicable. But do you know that it is possible to lower the term insurance premium rates if you follow the below given tips:

  • Opt term insurance at a young age

The simplest and easiest way to reduce the term insurance premium rate is by purchasing the term insurance cover at an early age. As we all know that the term insurance premium is directly proportional to your age. So the best way to lower the premium is by purchasing the term insurance policy at a young age. So the best time to purchase a term insurance policy is immediately after you get your first job.

  • Mode of Payment

The mode of payment refers to the premium payment frequency of the term insurance plan. It is usually observed that while purchasing term insurance plan most of the people opt for monthly or quarterly as the frequency to pay the premium of the term insurance plan. However, choosing an annual mode of premium payment shall help you in reducing the premium amount of your term insurance policy.

  • Policy Tenure

Policy tenure is one of the factors that affect the premium amount. So if you want to reduce the premium of term insurance policy then opt for longer policy tenure as longer the policy term lower will be the term insurance premium rates.

  • Mode of Purchase

The premium amount of term insurance policies purchased through offline channel bear higher premium amount as compared to the online term insurance plans. The reason for this difference is that in offline mode the premium amount consists of costs related to agent’s commission, documentation charges etc. which are not a part of online term insurance plans. So opt for online mode of channel while buying a term insurance plan.

  • Healthy Lifestyle

Leading with a healthy lifestyle plays a positive role in deciding the premium of the term insurance plan. Avoiding tobacco, smoking, and alcohol consumption will help you in lowering the premium amount of your term insurance plan as you need to disclose this information in the proposal form.

Thus, above are the most important factors that help you in lowering down the premium of your term insurance policy. How to purchase the Best Term Policy? Now-a-days the process of purchasing a term insurance policy has become very transparent, quick and simple. If you wish to purchase a term insurance policy then you can purchase it in two ways namely:

  • Online Channel

Online channel is the recent trend which is adopted by many for the purchase of term insurance policies. Online term insurance plan is easy and quick to purchase. Customers can buy the online term insurance plan on the official website of the insurance company or via various insurance broking websites who make available various insurance plans of various companies on their website. These aggregators have various tools like the term insurance calculator that helps in comparing various plans within minutes.

  • Offline Channel

Offline channel is the traditional way of buying a term insurance policy. Under this channel, you can buy term insurance plan directly from the office or branch of the insurance company. Alternatively, you can also purchase the term insurance plan for the registered agents and advisors of the insurance company.

Thus, the above guide will help you in choosing the best term insurance policy available in the market.

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.