Term insurance is one of the most talked about things in recent times when it comes to finance. While it was earlier believed to be something that older individuals would be interested in, young working professionals also show interest in term insurance products today. They understand the importance of insurance and make it one of the first things they spend money on. Being as vital as it is, it is important to choose the right plan and to buy it the best way you can.
There are different types of term insurance plans available in the market. Different insurance providers offer plans with varying terms, conditions, and benefits. With such variety available, you must have some level of knowledge about the product before selecting the right one.
What is term insurance?
Term insurance is a financial product that offers coverage with flexible terms and customization to a great extent. These are the factors that attract various buyers to the product. Term insurance works on the simple rule that if you die, your beneficiaries receive a payout. It has a tenure that can span up to 40 years and offers much higher coverage than traditional life insurance policies. Contrary to other types of life insurance, pure term insurance does not have maturity benefits at the end of the term.
When you first begin to look into term insurance, the various advantages it offers can overwhelm you. This sense would have you assume that term insurance is one of the costliest insurance products out there. However, that is not the case. Term insurance is among the cheapest life insurance options you can find. The reason for this is that the policy purely focuses on life coverage. Moreover, the premium also depends on factors like policyholder’s age, lifestyle, medical history, etc. Hence, it is possible for policyholders to get a lower premium if these factors are favorable for them.
Usually, when you buy an insurance policy, it stays active as long as you keep paying premiums. But, with each renewal, the premium differs and can cause a major financial burden on you. In the case of a term plan, there is a fixed term that a policy can have. This means that the total premium is calculated and can be paid in multiple ways. Term insurance plans can be 10 to 40 years long depending on your choice and other factors. This makes it easier to plan different parts of the policy beforehand.
Types of plans
Term insurance plans have a lot of variety and offer a great deal of options. With every individual’s needs evolving over time, simple and minimal coverage is not effective for long. To suit different requirements, insurance providers offer varying types of term insurance like ROP term insurance, increasing term insurance, etc. Moreover, you also have a ton of buying options with term insurance. You can elect your own cover amount, the nominee, and the mode of payout among many other things.
Premium payment options
Term insurance is one of the few insurance policies that offers you options in making premium payments. While the usual structure is of paying an annual premium for any kind of policy, term insurance offers some other options as well. The first of which is making a one-time premium payment.