What is term insurance? Term Insurance Why it is best

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Term insurance is a type of life insurance. It is a pure form of life insurance, and hence it is called pure life insurance. The insurance company provides coverage to the insured during the term life insurance for a period of up to five, ten, fifteen or thirty years. This type of insurance does not provide any benefits after the insurance period is complete. Even if you do not benefit after the expiration, it is recommended that intellectuals associated with this profession develop a term plan. Today we will know what insurance is and why you need it.

If you are in the dilemma of having to buy term insurance or other life insurance, this post is for you. After reading this post completely, think there are many benefits.

What is term insurance?

Term planning is a type of life insurance. In our simplest terms, this is real life insurance. The remaining products are made by the insurance company according to the customer's needs. In such insurance, the insurance company pays the insurance amount only if the policyholder dies. If the insured survives until the end of the plan, the expiration benefit will not be provided.

In this policy, the insured person is covered for a fixed period of time. The term plan premium is much lower than other life insurance products. For example, it starts at $ 60 per month. According to the term, if the insured dies and the insurance is in operation during the insurance period, we will provide an insurance company called Sum Insured to the family or the designee.

Why is Term Insurance the best?

Most people don't know that insurance is a risk management technology and not an investment medium. That's right. Insurance companies introduce various types of life insurance plans to their clients, which will benefit them at the end of their coverage. However, these benefits are much lower than other investment channels.

For example, suppose your insurance company invests $ 30 of the premium you paid and gets $ 5000 after the insurance period. If you had invested $ 30 per month in a mutual fund, you would have received at least $ 15,000 in 15 to 20 years. Perhaps this will give you an idea of ​​why buying a premium is good. If not, we understand it well.

Most insurance professionals and financial advisers recommend that customers purchase term life insurance instead of investing in life insurance, general life insurance, unit-linked insurance plans or donated life insurance. And invest the remaining money in mutual funds, fixed deposits or any other safe place.

Keeping insurance and investment separately takes some time, but if you believe it, you can get huge profits.

If you met with an insurance agent, you probably knew that most insurance companies did not ask you to prepare a term plan. If so, think of your insurance agent as an educated person who understands your needs. Most agents motivate their customers to bring other life insurance products, such as unit consolidation plans. However, if the same agent sells a term plan, you only receive a fee of 5-10%.

It should not be forgotten that the insurance needs vary. In some cases, the life insurance period is sufficient, and in some cases, a separate life insurance plan must be made. But for most people, the combination of the terms life insurance and health insurance is good.

Benefits of term insurance

  • In term plans, you can get very high coverage by paying a very low premium. For example, a period premium of $ 250k would cost $ 2 million a month. If you only want to cover this amount in life insurance, you may have to pay thousands of monthly premiums.
  • In case of accidental death, insurance is provided to the insured. It also includes the disease to find a cover.
  • You can increase or decrease your regular premium as needed.

Things to keep in mind while taking term insurance

Do i need: First decide whether you need a period plan. If your family depends on you you need it. On the other hand, if no one leans on you and does not get married (and will not get married soon), you may not need it. In such a situation, instead of buying the term insurance, you need to buy health insurance and invest the rest of your money elsewhere to meet your future needs.

Buy the cover according to the need: In term insurance, the premium amount is fixed according to some insurance. That is why always take cover according to your need. If you buy more cover than required, then you will have to pay more premium. Similarly, if you take a lower premium then it will not be good. Get sufficient insurance as per your needs. Insurance consultants say that a person should take an insurance cover of 10 to 15 times of his annual income.

Nominee: In case of death, it is very necessary to decide to whom the insurance company gives the sum assured. Announce your nominee carefully. For your information, you can change your nominee even after purchasing the policy, if you wish.

Term insurance premium: don't forget to compare your insurance premium with other insurance companies. When you do this, you will know how much other insurance companies charge for the insured amount you have decided. If there is another insurance company that offers the same benefit with a lower premium, then you should buy coverage from that insurance company. In this way, you can buy the cheapest term plan.

Disclaimer: The information given is for educational purposes only and should not be treated as a financial advisor. Talk to your financial advisor for more information.

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