Why Acquire Term Insurance Plans In India?
Term Insurance plans cover the insured’s dependents against financial risks which arise after the policyholder’s demise. Life consists of uncertain events. In such a situation, term insurance plans do the work of mitigating financial trauma which may be faced by the family after losing its breadwinner.
Term Insurance plans provide insurance coverage for a specified amount. The policy also is for a particular period of time. This is the phase during which insured pays his premiums. If the insured dies during this period, the sum assured amount is provided to the concerned beneficiary. The term of term insurance plans vary across insurers. The maximum cap is 35 years.
How much is enough?
This is another major question hovering in the minds of many people- What coverage amount should I opt for? Mostly, people should choose an amount which is 10 times their existing annual income. It is so because this logic ensures that your family will get a good coverage over a considerable period of time.
Reasons for buying term insurance plans-
Those having families to take care of, it is important for them to get term plan. The term plan will ensure that the family continues to live a standard life and don’t suffer financial pain.
Any responsible person will consider buying term plan as one of his prime priorities. It’s because he does not want his family members to undergo financial stress when something goes wrong in future. Hence, term policy imitates the role of the bread winner in the bread winner’s absence and gives financial support to the dependents.
Rising liabilities- This is also a key reason for getting term plan. Many today have a lot of liabilities like education loan, home loan, vehicle loan and credit card bills. Term plans help safeguard one against such liabilities thus preventing any compromise on important needs like education and from losing the ownership of the house.
Savior during the unfortunate time
Truly, term plan acts as a savior during unfortunate times when the breadwinner passes away. It becomes difficult for the family to tackle the immediate doldrums especially relating to financial ones. In such a situation, term insurance plans provide a great breather.
Be careful as to where you get your term insurance from?
The rates of term insurance plans vary by around 40% across several companies. Hence, it’s important to carry a thorough research prior to buying.
An agent may not always be the best option for the following reasons-
- The plan recommended can be way expensive
- He’s more likely to recommend you something where he can get a higher commission.
Term plans provide low commissions to agents. Since, last few years, term insurance rates witnessed significant cut by 40-50% thanks to increased competition & lower mortality rates.
In Term indemnity policies, the insurer provides the policies. The insurance company provides coverage to the insured and the insured is required to pay regular premium. If the insurer fails to do so then the policies get lapsed. The insured gets a coverage plan from an insurer. It’s for a specified amount. It’s for agreed number of years. It is this time during which insured requires paying fixed amount as a premium towards the Insurer.