These days, people have become aware of the benefits of buying a term insurance and its importance in securing their families. Though, there are different divisions in life insurance but no other form can beat the importance of term insurance plan. This article aims to make you understand the pros and cons of term insurance.
To start with, let’s understand the meaning of term insurance. A term plan is a form of life insurance where the nominated person will get the death benefit if the life assured dies during the tenure of the policy. Compared to other products of life insurance, the plans of term insurance are much more affordable. Therefore, the term insurance is affordable to every citizen of the country.
The best thing about term plan is that it has high sum assured amount and low rate of premiums. The pay-out given to the beneficiaries helps them fulfil their daily needs, even when the breadwinner of the family (policyholder) is not anymore to take care of them. Hence, it’s very essential for every citizen to know the basic elements regarding the term plan for securing their lives.
Different Factors To Consider Prior To Buying A Term Plan
Though, there are plenty of terms plans available in the market, the customers need to pay attention to the plans that can give them higher sum assured such as SBI term insurance. Here are few important points given below that an insurance seeker should consider while buying a term plan:
- Adequate coverage amount: Every individual looks into the coverage amount before buying a term plan. They give the highest priority to the over amount or the sum assured as the death pay-out is expected to play the most important role in financially securing the family of the policyholder. Therefore, it is always advisable to evaluate the term policy, which can bring them around 10 to 20 times the present annual income.
- Policy period: The time for which the policyholder fixes the life cover is known as the tenure of the policy. It is always advisable that the policyholder must buy the plan for the longer period. If anyone selects the term policy at early age and chooses the long duration then he would avail the benefit of paying the low premium until he or she reaches the retirement age.
- Additional covers: People are aware of the pros and cons of the insurance. They add the rider above the base policy. The rider helps to expand the coverage of the insurance.
Term Insurance Riders
This is another benefit offered by term plans besides providing higher coverage at lower premiums. The riders are considered as extra benefits, which can be availed to the base term plan at nominal cost. It offers additional financial coverage over the basic sum assured. Here are some of the popular riders that every applicants should be aware of:
Critical illness rider
An individual can receive the lump-sum amount for the treatment of critical illness (those which are specified in the document of the policy). Critical illnesses such as stroke, paralysis, heart attack, organ transplant, coronary artery by-pass surgery, kidney failure and so on are covered under the critical illness rider. The person can avail the sum assured of this rider on the initial diagnosis of any of the ailments.
Accidental Death Rider
The extra or additional sum assured is paid to the beneficiary with the accidental death rider, if the life assured dies due to an accident. The additional amount’s percentage should be calculated as per the original coverage amount.
Accidental permanent disability rider
With the help of this rider, the lump-sum amount will be provided to the policyholder if he or she becomes disabled permanently due to an accident. As the policyholder will no longer be able to work, the pay-out from this rider can be used to take care of the daily expenses.
In addition to that, the policyholder will also avail the additional benefit under the umbrella of the term plan. It is always advisable to the policyholders to include add-ons to the base plan as it provides them with much-needed extra protection. The policyholder can enjoy the benefit of lump-sum pay out, monthly pay-out or both monthly and lump-sum amount.
If an individual wants to secure her/his family, he or she should choose a plan that will provide his family with the best financial security. When it comes to secure one’s family, term plan should always be the first choice for them as it gives innumerable advantages to them. However, you should still compare different plans and choose the one that suits your requirements the most.