Life has suddenly become a pool of uncertainty since the COVID-19 pandemic has hit the world. We all need little boosts of assurance in such times to help keep our minds at ease. An important aspect of everyone's life is their finances and knowing that you and your family are financially secure can take a huge load off your shoulders.
Term Insurance is one of the simplest, accessible and affordable ways of ensuring that your loved ones have ample financial back up, in case of an emergency.
Understand the basics of term insurance in 5 points:
- Term insurance policies are life insurance policy plans where you receive coverage for a fixed 'term' of your life in exchange for a fixed, reasonable premium. Term insurance policies offer a high cover (For eg-1Cr term insurance) for a very low premium (For e.g. - ₹422/month under India First Term Plan)
- In case death of the policyholder takes place within this term of policy, your beneficiaries/nominees receive a 'death benefit' amount of the assured sum in the term plan.
- When your term period is over, there is no maturity benefit and if your policy expires, you don't receive any returns on premiums paid either, unless you have a Term Insurance Plan with Return of Premium (TROP). There is no other savings component.
- Your premium is fixed and does not change (increase or decrease) throughout the term of your policy. You receive cover till the time you pay regular premiums. If you stop your premium payment, the policy is automatically cancelled after some time and you receive no benefit. You can renew your policy during the renewal period against an adjusted/new premium
- There are additional rider benefits available in term plans for managing expenses in case of critical illness, accidental death, disability, premium waiver etc. This can make your term plan more comprehensive and minimize the burden on your family in case of an emergency.
Term Insurance is as easy as ABC!
The primary objective of a term insurance policy is to ensure protection to your family in case of an unprecedented or untimely death. In case the policyholder is the sole breadwinner in the family and expires suddenly, his/her family undergoes major emotional and financial distress. Hence, the payout of a term insurance policy can help the departed's family remain financially stable and manage regular expenses.