How to secure the future with your present deeds?
Many a times due to rising inflation and changing lifestyle patterns people find it difficult to save enough money or make huge investments towards getting a secured future for their loved ones. And just imagine if the tragic day arises in life when you meet with an unfortunate event and leave behind your family who remains shattered with no source of bread and butter to continue their livelihood ahead. This very thought of such a scene jolts your minds and hearts and you start taking your first step towards making a compulsory effort to have some sort of investment for a secured future of your loved ones.
Well the answer for your concern comes in the form of “Low-cost term insurance plans” which are source of insurances giving a cover big enough to replace your income if something untoward happens to you. We would say term insurance plans are those future securities of life for which you just need to spend only 1% of your income to ensure that the remaining 99% is available to your family till your existence on earth.
Term life insurance is generally a type of insurance meant for healthy people with limited income. The premium is low as compared to the premium on a permanent life insurance policy. It is useful for people who want to ensure that in case of their death, their children can attend college, or their spouse can pay off the mortgage on the house. In other words, it is advantageous for people who want their family to receive some monetary compensation in case of their death, but are unable to afford the higher premium compared to other insurance policies.
However, an investor should always know that term insurance is a pure risk coverage plan i.e. it covers income related risks. It protects your family against financial hardships in your absence. But term insurance plan cannot be perceived as an investment tool as it does not provide any maturity value to the policy holder in case heshe outlives the term period, unless he/she chooses a return of premium term plan.
Types of Term insurance plan
For term insurance plan the amount of premium remains the same during the tenure of the policy. Sometimes the premium is fixed for a 10 year period, after which it may be adjusted. The premium then remains at the new adjusted level for the next 10 years. The duration of a term life policy can be selected between 1-30 years. Annual level term insurance is generally renewable. The most popular term life insurance plan is the 20-year term plan. It is generally meant for people less than 80 years of age who decide to secure their family with some sort of relevant plan during their late 30s or mid 40s if their income source is not sound enough to make huge investments. Generally, the 15 and the 30 year term policies are known as mortgage life policies, since they are meant to pay off any outstanding mortgage balance on the house, in case of death of the insured person.
As the name suggests, these insurance plan can be renewed at the end of the specified term, without the policy owner having to undergo any further tests or checks for determining his/her eligibility for getting insured. In this case, the initial premium may be higher than the premium that has to be paid later.
In this case, the amount of 'death benefit' which is received by the beneficiary decreases/increases with time. However, the amount of premium remains the same during the term of the contract.
Convertible term insurance plans give flexibility to the policy owner to convert a level term policy into a permanent policy. This is useful for people who might feel that, at some point in future, they would have the ability to pay the higher premium that accompanies a permanent policy.
This policy carries a lower premium than other term life policies, since it is provided by the employer or by some association to a group of people.
Term life insurance plans are low-cost investments vehicles that provide a predetermined amount of money to the beneficiary. A fixed stream of payments mode as compared to a lump sum proves advantageous to some people whose income might be low but still wish to plan for a better future of their loved ones.