How term plan works?

You are probably working hard to make sure that your family is living a comfortable life. But have you ever thought about what would happen to your folks in your absence? Well, this is certainly not a very nice topic to bring up. But, it needs to be brought up and it needs to be discussed. It is pivotal in this regard to have an insurance cover. While there are lots of insurance policies to suit the needs of people, a term insurance policy is a good way to protect your family. Now it is time to know more about how term plan works.

So, what is term insurance?

A term plan is a type of life insurance that offers coverage only for a certain period of time. In the event of the death of the policyholder, the nominee named in the policy will receive the death benefit. If the policyholder is alive through the period of the policy term, no benefit will be paid to the policyholder. However, there are a lot of policy terms that come with a guaranteed renewal feature. This feature permits the policyholders to increase the term of the policy.

What are the eligibility criteria for term insurance?

A term plan will have some minimum eligibility requirements. The plans are mostly available for people between the age of 18 to 65 years. The maximum maturity age is 85 years. You can have the policy term from anywhere between 5 to 50 years. The sum assured varies from Rs. 20 lakh to Rs. 1 crore or even higher.

Why is a term insurance plan required for you?

A term plan offers a very good way to offer financial protection to those who are dependent on you. Also, purchasing a term policy is cost-efficient and can provide a cushion to your family in case of an unforeseen event. You will get a substantial life cover from the term plan at a small premium. This is how term plan works.

Whom will a term insurance policy benefit?

The dependencies in our life might increase with time. While some of us are supporting our spouse and children, some others need to financially support our parents. The responsibility of taking care of them in the event of your demise falls on your shoulders. If you are newly married, you can consider the life insurance policy for your spouse. You should even cover the financial security of your children under the term insurance.

Term insurance plans have riders

Insurance policies have riders and add-ons with the term plans. The most common riders are Critical Illness, Accidental Death and Disability, Hospital Care, and Surgical Care. The riders will surely increase the premium nominally, they will improve the policy coverage and offer better protection.

The term plans also help in tax deduction. The premiums paid under the term insurance plan will offer tax deductions up to Rs. 1.5 lakh in a financial year. You will get the tax deduction while paying insurance premiums for yourself, your spouse, and your children. Term plans offer the best way to offer financial security to the financial dependents.

Written by Lily A Singh