Should I consider getting term insurance? Life insurance is crucial for individuals with family and financial responsibilities, as we never know what might happen at any given moment.
An unexpected incident may leave our family in a tough spot. This is when financial security becomes imperative for the family that depends on us.
Term insurance, with its ability to provide a safety net, can offer peace and security in uncertain times.
Term insurance is a versatile tool in providing financial security. But before deciding whether to take out this insurance, let’s explore its benefits and flexibility in tailoring to your specific needs.
1. Easy claiming process: Term insurance allows for selecting multiple nominees, such as a spouse, children, or parents.
Furthermore, policyholders can also specify the percentage to be distributed among the nominees, thereby preventing conflicts between them at the time of claim.
Many people are unwilling to opt for term insurance because if the insured individual survives once the policy matures, the insurance company will only make payments once the policy matures.
2. Coverage in case of accidents: If the policyholder experiences permanent disability due to an accident, they can receive a specified amount as compensation for a certain number of years, with the insurance company making the payments.
Additionally, future premiums may be waived, although not all policies offer this feature. Therefore, it’s crucial to carefully read and understand the terms and conditions before taking out the policy, ensuring you are fully informed and aware of what you are getting into.
If an accidental death benefit is included in the policy, the insurance company will pay the sum assured in case the policyholder dies in an accident.
3. Policy renewal: Timely payment of premiums allows for an extension of the policy and allows for a claim in case of an unfortunate event.
The term insurance policy should have a structure where the premium is paid gradually rather than in a single lump sum.
Return of premium: Despite the benefits of a term policy, some individuals hesitate to take it because the money is non-refundable. Certain insurance companies offer term plans with a ‘return of premium’ feature to address this.
Under this plan, the insurance company will refund the premium paid if the policyholder survives the policy period. However, the premium for these policies tends to be higher.
Some individuals pay a high premium for a term policy to keep their money safe, but this may not be as advantageous as expected.
Instead, opt for a regular term policy and invest the remaining amount in good investment schemes. If you change your mind later, the investment money will be returned to you, although the amount paid for the term policy will not be refunded.