Term Insurance: Why are term plans so popular?

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February 15, 2021 4:48 PM

A term insurance plan is the best financial option that fulfils the requirements of your family. It is the most cost-effective finance solution for any individual.

Term Insurance plans are the simplest and most affordable form of life insurance that makes sure to pay valid claims if the insured dies during the term of the policy. They are also called pure protection plans which are specifically designed to secure the financial needs of your family. Simply speaking, a term plan ensures financial security, protection, and peace of mind for your family.

The Covid-19 pandemic has generated a worldwide ripple of panic and has put a keen emphasis on the need for a good financial plan that can shield the family from threats to both lives and livelihoods. Term insurance is the first and foremost part of sound financial planning. If you have financial dependents and outstanding debts, it is high time to buy term insurance and give a safety net to your family. The manner in which term insurance protects your family after you are the cardinal reason for its popularity.

In fact, a term insurance plan is the best financial option that fulfils the requirements of your family, even in your absence, and helps them continue their lifestyle standards and survival. It is the most cost-effective finance solution for any individual.

1. Financial protection at an affordable premium: A term plan gives comprehensive life coverage at a very low premium cost and ensures your family is financially stable throughout their life. If you have some liabilities like a child’s college fees, loan payments other financial engagements of life, term insurance helps plan the life events in a financially secure manner. The most distinctive feature is that term insurance is one of the most affordable types of life insurance products.

2. Provides simple and flexible solutions. You can choose a term insurance plan, which has three essential components – coverage amount, duration of term plan and premiums amount – as per your financial needs and obligations. Life insurers are offering wide-ranging term insurance plans to protect you and your loved ones from the uncertainty. Do take an informed decision about the term plan that best suits your need.

3. Buy it when young to pay a lesser premium: If you buy term life insurance early, you will have to pay a lesser premium. The premium amount for term life insurance plans increases substantially as you get older. At a younger age, individuals are healthier and have fewer obligations, when deciding on the term life insurance premium. Many people and online reviews, therefore, suggest purchasing a term plan at a young age.

4. Return of premium: For most types of term insurance, if you haven’t had a claim under the policy by the time it expires, you get no refund. But some companies have created term insurance with a “return of premium” feature, which returns a part or all of the money paid if there is no claim under the policy, once your term ends. The premium payable for such options differs from purchasing a standard terms insurance without return of premium.

Considering the above points, people prefer term insurance more than any other plans. By investing in a term plan, you help your family prepare for life’s unpredictability and mitigate their risk of sailing through life without you. It is better to be safe, secure and prepared for uncertain times. It is wise to take precautions and maximize the benefits of the best term life insurance policy.

The core objective of term life insurance isn’t tax saving, but ‘protection’. Term insurance policy falls under the bigger umbrella of life insurance policies, as it not only covers the policyholder in death, disease and disability but also gives him/her peace of mind. Hence, you need to plan term insurance if you have not done it already.

by Parag Raja, MD and CEO of Bharti AXA Life Insurance

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