“28th Nov was a wonderful day and Naira started working as usual. She was indulged into her work until she heard her colleagues talking about various options given by life insurance. Ahh….the word life insurance knocked her mind. What is life insurance she uttered, and her colleagues proceeded as further…”
“Naira you know the fact that we are here for finite amount of time only. Death is an inescapable fact of life. One thing is common in each religion and that is ‘people die’, but what happens to their souls varies from religion to religion. Though one thing is certain and that’s dealing with all kinds of uncertainty when your loved one is no more. So now here comes the new window of ‘life insurance.’
So again the clock stops to one question, what is life insurance? Where you would have heard about it earlier and wonder what exactly it does for you? It does wonders for the family.
People often think of life insurance policies as savings and investment option instead of considering quintessential element of life insurance which is nothing but a financial cover to manage the life risks. Well, term insurance is the pure life insurance meant to cover the life risks. Let us have a detailed look at various aspects of term life insurance.
- What is a term life insurance?
Term life insurance is a type of life cover offering coverage for a specific term or time frame in the life of the insured person’s life. As per this policy in case of the death of the insured within the specified policy term the entire coverage amount or death benefit will be paid to the nominee. These plans are basically designed to offer financial support to the family in case of the death of the earning member.
Naira was again pondering, what does this mean?
The colleagues uttered, “The time when you pass away all your valuable debts will be transferred to your beneficiaries, depending on what credits you left to whom. In case if you have left your home for your wife, then she will be in charge of all the monthly repayments, again depending on the bond. While the same thing applies for your car and other things you are in charged to. Maybe you even need to pay few taxes on the possessions you have. All this financial weight which you were incharged for will fall on your beneficiaries. So now be assured for your loved ones, as the life insurance policy you select for your family will handle all kinds of financial burden.
- The Logic Behind The Premium
The premiums of term life insurance plans generally become lower than the other plans. The premiums of these plans remain low just because there is no investment component with these plans. In case the policyholder survives the full term, no maturity of survival benefit is paid.
- How To Select A Suitable Term Plan?
There are several important factors that can play a great role in choosing the most suitable term plan. Let us list here a few considerations concerning this.
The reputation and brand image of the insurance company
The extent of life cover you need
The claim settlement percentage
The inflation adjustment in the premium and coverage amount
A detailed study into the terms and conditions of several insurance companies offering popular term plans
- What about the difference in premium among term plans?
The term plan premium may vary from one life insurance company to another. The common rule of thumb is with the increase of policy term the premium will also increase since bigger period brings bigger risks as well.
- What are eligibility criterion for getting a term insurance?
It also varies from one insurer to another. As for the age limit the minimum age is 18 years and while same for maximum age is 65 years.
- Can term insurance policies be converted to other policies?
Yes, it can be done provided the plan comes with a convertible option. When the convertible option is not provided you can easily convert it to the whole life plan or the endowment plan within the tenure of the policy. Such conversion requires no additional charges.
- Will a policy get lapsed if a single premium is missed?
Just by missing a premium once within the due date a policy does not get lapsed. After missing a due date a 30 days grace period is allowed.
- Before the tenure completed can I surrender a term insurance plan?
Yes, anybody can surrender the plan before the completion of the tenure. There will be surrender charges and it varies from time to time. In case the surrender of the policy is done after 5 years, there is no surrender charge.
So with a life insurance policy you can easily protect your family from any kind of serious financial difficulty with the financial baggage you select and work for. Moreover, the life insurance is supposed to cover your monthly income, your family won’t have the need to manage without your income. A good rule of thumb is a year’s income as this will give them time to invest the money and security.