If one is under the impression that insurance is an investment to be made only after 30 or 40 years of age, then one might want to rethink on this! Gone are the days when people invested or opted for a term insurance only when they endangered their existence or when they wanted to put their money in a safe place. Nowadays, generations are wiser and understand the benefits of insurance much more than ever before. Among all insurance types, term insurance is one that has caught on among Gen X and Gen Y.
Here are the top reasons that will convince one to buy a term insurance:
It is affordable: When compared to other financial products, term insurance is considered to be one of the cheapest products in the market. One just needs to pay the premiums for the chosen sum assured, while the insurance company upholds its promise of paying the death benefits which is the agreed sum assured in case of death of the insured.
It is one of the easiest insurance policies available: Term insurance is easy when it comes to opting for it, signing up for it, preparing the paperwork etc. It is less cumbersome and hence, rated as the most preferred financial product.
It is a tax-free benefit: For those who struggle to claim legitimate tax benefits, a term insurance works like any other insurance plan and provides tax benefits to the policyholder. The premium that is paid is deducted from the policyholder’s taxable income upto Rs. 1.5 lakhs under section 80 C of the Income Tax Act, 1961.
It is a highly recommended financial product: A term insurance is recommended by most financial advisors because it covers the biggest risk – death. When one invests money in this type of insurance, one secures the future of family members by ensuring financial support even when one is not around.
It brings in the benefit of low premiums: One can decide the sum assured and get himself covered at nominal premiums in comparison to other insurance plans. In short, it guarantees life cover at low and affordable premiums.
On time pay out: In case of unfortunate death of the policyholder, the family members are paid the sum assured within the stipulated time.
How Does Term Insurance Work?
The process of term insurance is simple. There are two scenarios to this policy
In case the policyholder dies:
The policyholder has to pay the premium until the stipulated time. If the policyholder suffers an unfortunate death during the period, the sum assured is paid out to the nominee.
In case the policyholder does not die:
In this scenario, nothing is paid to the policyholder. Only under a return of premium term plan the policyholder will get the entire premium amount back, (the premiums under such plan is higher than a regular term plan).
A term insurance can provide benefit or coverage to a maximum of 40+ years. The length can be 5, 10, 15, 20, 30 or even 40+ years – This duration can be chosen. Also, note that the premium varies according to the duration of the term plan. The longer the duration of cover, the higher the premium.
Step By Step Process of Applying For Term Insurance:
Given below is a stepwise guide on how to apply for a term insurance:
- Assess the requirements: This will include assessing family needs and the premium that one can afford.
- Compare different quotations from various policy providers: Based on the initial assessment of the need for a term plan, one must approach various policy providers for their respective quotations of term insurances or get the same easily and conveniently at Coverfox.com.
- Look at the claim settlement ratios: This is usually a percentage value. The insurer promises to sanction the amount (final settlement amount based on the premiums paid) within the stipulated time.
- Consider the factor in inflation: Age and cover duration play an important factor. Based on one’s age and duration of the term plan, one must ask the insurer to provide the inflations rates and ratios.
- Check for riders: Riders help extend the insurance policy if need be. They help in extending the term, thereby helping with increased protection.
- Finally, opt for the best term insurance.