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Term life insurance plan is one of the oldest plans that have survived even in recent times where risk-taking insurance ventures have become an alluring proposition for many high-salaried people or endowment plans where survival benefits are much sought-after policies for families with kids. What makes a Term plan to survive even today is perhaps its simplicity. It is the purest form of insurance which only acts as a savior when the life Assured dies and leaves behind dependent people and often, huge loans to repay.
Let’s check out the efficacy of term plan as the simplest form of insurance that acts as a perfect cover to protect families from an untoward future in case of a calamity.
Term insurance policies are pure protection plans where the nominee gets Death Benefit only in case the Life Assured dies within the Policy term period. Families who are dependent on the only bread earner get financial cover to meet the same standard of living in case the life assured dies.
Many people require taking huge loans to acquire movable and immovable assets. For instance, home loan or car loan are some essential loans required today. To ensure that the family does not suffer in case the sole earning member becomes incapacitated to earn further and thereby repay the loan, term plans are the best bet. A Term Insurance policy can be bought with the Sum Assured being same as the loan. In case the life assured or the earning member dies, the death benefit can be used to repay the loan.
The premiums for the term plans are not high as compared to endowment plans or ULIPs. So, you can opt for financial stability for your family by getting a term life insurance plan and maintaining it with a modest Premium per year. The premiums are also exempted from income tax as well. At a low cost, it can serve as a financial savior to your family.
In case you require accidental coverage, or any other benefits, you can opt for a low premium top up plans. Some term plans also have Riders associated with it which give you additional benefit as well. However, you need to pay an extra amount as premium for availing the rider benefits.
As term plans are simplest form of insurance, they don’t provide survival benefits. So, in case you survive the term plan, you don’t get anything at maturity. Contrary to the term plans, an Endowment Plan would give you Maturity benefit apart from death benefit. However, many point out that money received after maturity would be far less than the amount one would receive had they invested in other profitable schemes. With Inflation rising each year, the value for money would also reduce immensely – and, getting the maturity benefit would actually be a loss. In other words, term plans, even in its simple form of just providing Risk cover to an individual, is far better as it provides financial stability to the family in case of unfortunate death. And, buying an online term life insurance would not only be hassle-free but also cost-effective as no agents or paperwork would be involved in the process. Whether ULIPs, endowment plans or survival plans, term plans are far more appealing as they provide financial surety at a cost that does not pinch your pocket.