Term insurance is the most comprehensive form of financial protection for one’s loved ones. It helps the family of the insured person meet their financial needs and household expenses, when the breadwinner of the family (insured) is no more. For availing a term insurance cover, the insured person has to pay the premiums to the insurer at regular intervals for a specified period. The insurer is liable to pay the beneficiary (nominee) the sum assured (cover amount) in the event of the insured’s premature death during the policy term.
There are numerous benefits of term insurance. Some of them are as follows:
Life is good when the breadwinner in the family is around. Regular income flows and all basic necessities of life are taken care of. But, all hell breaks lose, if the family faces the unforeseen unfortunate event of the breadwinner’s untimely death. This is the time when a pure term insurance plan provides the family of life insured meet their ends meet, providing financial security. The insurance payment ensures that the basic necessities and lifestyle continue even when the head of family is not there. It is important to note, one should enhance and increase one’s cover amount with the increase in responsibilities and lifestyle spending.
Frees one’s family from the burden of outstanding loans
We have to often take loans (like home loan, car loan, etc) to meet our life aspirations. While we are alive and kicking, we remain confident of paying off these loans. However, if we are not there, the burden to repay these loans falls on our family. The amount received from a term insurance cover ensures that these aspired assets are made debt-free and our family continues to maintain the similar lifestyle.
Large coverage for low premium
The premium amount to be paid for a pure term insurance plan is relatively lower compared to other insurance and investment plans. In fact, in recent years with the advent of digital and improved mortality conditions, pure term insurance plans have become very affordable. For example, Bharti AXA Life Insurance offers Rs 1-crore cover for a 30-year old male at less than Rs 750 per month.
Flexibility is one big advantage of term plans. It is no more necessary that you are required to go through cumbersome documentation and medical tests. Using income and lifestyle surrogates most insurers these days provide straight through processing with basic declarations. One can also make affordable monthly payments through the ECS route. In case of claim payout too, there are options to receive it as a lump-sum or as monthly income for the beneficiary.
Peace of mind
The most important benefit of a term plan is the peace of mind that the insured gets once he has secured his family’s future.
Besides, like most other insurance plans, term insurance policies provide tax benefits as well as additional cover through riders, such as Accidental Death, Critical Illness and Waiver of Premium riders.
(By Vikas Seth, CEO, Bharti AXA Life Insurance)