The reason why Term Life Insurance Policy is relatively affordable when compared to any other life insurance policy is that it comes with an exact term ranging from 5 to 30 years. In other words, Term Insurance policy is an assurance plan which covers you for a limited period of time. And god forbid if you bite the dust during the term of the policy then your family will get the benefit of your term plan but if you outlive your term plan then what?
Do you ever come across the thought of your family and loved ones living in your absence? Isn’t it frightening to think about something like this? If yes, then why don’t you do something to secure your family’s financial future?
Often, we hear that “I want to make my family’s life secured, but I have so many doubts which make me confused, and I usually skip the decision of buying an insurance plan.”
Therefore, let us clear all your doubts related to Life Insurance Policy and Term Plans so that you can make your buying decision wisely.
You will receive answer to following Questions after reading this blog:
|Question 1||What is the need of purchasing a Life Insurance policy?|
|Question 2||Why is it said to be essential for your financial planning?|
|Question 3||How is the Term Insurance Plan better among other plans?|
|Question 4||Isn’t it an extra burden during your crucial career time?|
|Question 5||Am I even eligible to buy Term Insurance Plan?|
Importance of Life Insurance Policy
Let’s start by discussing the need for an Insurance Plan. Sit, relax, and think, god forbid something unfavourable happens with you tomorrow then is there any other income source available for your family? If yes, then Life Insurance plan might not be the right option for you, but in case your answer is NO, then there is a considerable need of buying a policy with immediate effect.
Role of Term Life Insurance in Financial Planning
It is essential to have Term Life Insurance plan (simplest form of a life insurance policy) in your bucket while doing financial planning because there must be a backup plan ready for your family which can help them survive financially in your absence. Life Insurance policies are these reliable backup plans which you can opt to secure your family’s financial future.
USP of Term Insurance Plan
There are plenty of insurance plans available in the market, then why Term Insurance Plan?
Following are the five reason why you should opt for Term Life Insurance Plan:
|1||Low Premiums High Coverage|
|2||Simple yet Flexible|
|3||Income Tax Benefit|
- Term Insurance plans fit precisely with the pocket of the middle class and lower-middle-class families. Term Insurance Plans have the lowest premiums among the available insurance plans. It offers death benefits in the form of insurance coverage amount to support your family in your absence.
- Term Plans are extremely easy to understand, even if a layman read about its terms and conditions and understand it. Here, you just need to pay fix premium for a specific period of time against the insurance coverage. In case of your demise within the policy tenure, the nominee gets the sum assured or the death benefit amount.
- Term Insurance also helps you save your money from Income Tax Deduction under section 80 C.
- You can convert your Term Insurance Policy at any point of time to any other plan like Endowment Policy or Cash Value Policy as per your requirement.
- Last but not least, mental peace. As per a survey yearly, 8 Lakhs people take their life due to depression and mental health issues. This is a topic which we cannot ignore. Term Insurance Plan gives you mental peace because it works as a shield for your family in your absence. Term plan gives your family the freedom to follow their dreams without worrying about the financial condition.
Term Plan – Financial Stability or Liability?
If you ask whether the Term Insurance Plan is an extra burden on you, then the answer is a big NO. The premium of a term plan is extremely low, and you can easily afford it even with your limited income. If we talk about the average premium cost of a Term Plan worth ₹2 Crore, then it would be around ₹28 per day only. One can easily afford it without thinking about any extra financial burden. Term Life Insurance is not a liability; instead, it is an asset which will help you in the long run.
Eligibility Criteria for Term Plan
People often get confused when they get to know that there is an eligibility criterion as well to buy Term Life Insurance. So, the role of eligibility criteria here is to decide the amount of premium after evaluating the risk factor. To simplify this, let us try to understand it through a story:
This is a story of two best friends, Hunny and Bunny. Both were childhood friends, and recently completed their education and got placed together in an international BPO. Hunny was shy in nature and extremely introvert while Bunny was opposite, he was extrovert and a party animal. Hunny used to complete his work with dedication and go home right after that while Bunny use to haggle in between work and used to go out for parties regularly. Soon Bunny has developed the habit of smoking and drinking.
Now one day Hunny received a call from one of the Insurance Experts telling him about the Term Insurance Plan. Hunny got excited to know about its features that too in such low premium cost. He agreed to buy the plan and referred his best friend Bunny also.
Both of them were eagerly waiting for the next course of action to buy the term plan and soon they received the acceptance application with the premium amount. Hunny received ₹1 Crore cover that too in ₹490/- per month wherein Bunny received a similar amount of cover in ₹685/- per month.
When they discussed the premium amount with each other, they got confused and thought that there might be some clerical mistake in premium amount because both of them were of the same age, getting similar CTC and wanted the cover of ₹1 Crore. When they discussed it with the insurance company, they got to know that the increase in Bunny’s premium amount is because of the habit of smoking and chewing tobacco.
Therefore, the eligibility for a term plan depends on your age, health condition, lifestyle habits and of course, income. It would be best if you always did your research about life insurance policies before buying one. If you still have any doubts or queries, visit BimaKaro.in and get the best advice from our insurance experts.