Why a term plan is a must for every individual?

A term plan is one of the best products to provide financial security to your family. The post today will brief our readers about what term plans are and why you should buy one. A term plan is one product that offers maturity benefits at the time of death of the insured person. The benefit is passed on to the nominee. Life cover is the biggest benefit of a term plan which helps to shield the family from the financial burden that usually accompanies the death of a loved one, especially if the expired person is an earning member of the family.

Limited period payment & coverage for whole life

In a term plan, the insured person pays the premium for an agreed number of years from the date of commencement of the cover with an assurance from the life insurance company that in case of death, the cover amount will be paid to the nominee. The coverage can be till the age of 100 or less, depending upon the wish of the buyer. Usually, the age is kept between 75-85 years. The insured person pays the premiums till the time of death and in case the person survives till the age as mentioned in the contract then no payment is made. Nowadays innovative payment methods allow individuals to pay for a period of 5-10 years and avail benefits of term plan till the age till which the insured wants to be covered. This not only saves a lot of money but also reduces the risk of skipping premium payment thus reducing chances of policy lapse.

Cheap to maintain yet penetration is low

A term plan should be a requirement of individuals across all age groups (maximum age of entry is around 60 years) as it provides a cover for the family and is easy to maintain. Term plan is the cheapest of all insurance products and offers maximum coverage per rupee of premium. Unfortunately, insurance penetration on the whole in India is still around 3.7% which is even lower than the world average figure of 6%, clearly showing that people haven't been told the benefits of term plans.

Plethora of benefits

The premium paid on term plans is admissible as a deduction U/S 80C. Majority term plans also come with a waiver of future premium benefit in case of detection of a critical illness to the insured. Apart from this, there can be different riders like a critical illness rider or accidental death benefit which entails more maturity benefit over and above the basic cover in case of death by accident. However, these add on features come with a cost.

Enter at an early age to get the cheapest quote

With an increase in the service class population, term plans are gaining more prominence but even then penetration levels are low. A term plan should be on the top of the list when the person starts saving. The earlier one gets a term plan the cheaper it is. There is no ideal cover for a term plan but roughly the cover should be at least 10 times your yearly income. The term plan application needs to be accompanied by ITRs or salary slips and the insurance company may ask for medical tests (done at your home free of cost) before finally issuing you the policy.

A steep cost increase anticipated, so hurry up!

From April 1, 2020, the premiums on term plans are expected to go up steeply. So, in case you have been planning to buy a term plan then now is the right time to do it. For more details please write to us at finriseinvestment@gmail.com or call us on +91-8568953926.

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