You may plan plenty of financial goals and build various financial strategies around them. However, the fact remains that life itself is unpredictable. If you are the sole breadwinner of the family and should anything unfortunate happen to you, such as death, then, it can not only shatter your goals but also leave your family high and dry. This is when term insurance policies come to the rescue.
In this article, let us take a look at term insurance plans in detail and understand the various benefits it offers.
What is a term insurance plan?
It is essentially a type of life insurance plan which provides death coverage to policyholders for a specific time or ‘term’ of years. So, in case of the demise of the policyholder during the tenure, the insurer pays out a lump sum amount to their nominee.
Unlike traditional life insurance policies, this insurance plan does not provide maturity benefits. However, it offers more coverage at an affordable price.
Why do individuals opt for this insurance plan?
Term insurance plan comes with a host of benefits. Some of them are mentioned below.
- Simple to understand:
One of the reasons for the growing popularity of the term insurance plan is its simplicity. This plan is designed to offer your dependents the sum assured in the case of your death. The only thing you need to ensure is that the premiums are paid on time.
Unlike other insurance policies, this plan is relatively affordable. Furthermore, it offers you the flexibility to select your payable premiums.
- Additional Riders:
Generally, term insurance plans come with riders. These riders allow you to enhance the basic benefits by the plans. To add these riders to your insurance plans, all you need to do pay a nominal additional premium. The premium may differ for each plan.
- Can be used as collateral for loans:
Life insurance policies can also be used as collateral or security for financial borrowings such as personal loans. This plan is one of them. While many lenders may prefer permanent life insurance policies for their cash values, a term policy is sufficient if you have a good credit score.
Before you buy this plan, it is advisable to go through the terms and conditions carefully. You can also reach out to financial advisors and seek their help to make a more informed decision. They can help you in understanding the nitty-gritties of the plan. Whether it’s a feature or using the term insurance premium calculator, financial experts can help you get acquainted with all aspects of your plan.