The purpose of a life insurance policy is to secure the financial stability of the family in case of an unforeseen event. You may avail of a life cover in two ways:
- Choosing a pure life cover in the form of term insurance
- Opting for a policy with an in-built savings component known as endowment policies
In the last few years, term plans have gained popularity due to their affordability and other beneficial features. However, there are still many people who do not know what is term insurance.
What is term insurance?
Term plans are pure life covers without any investment or savings component. The policy benefits are paid to your beneficiaries in case of anuntoward situation. However, if you survive the policy term, there are no maturity benefits.
Term insurance plans are the simplest types of life covers wherein you can avail of a higher coverage at a relatively lower premium.
Features of term insurance policies
- Higher coverage
It is recommended that you have at least ten timesyour annual income as life coverage. Procuring higher coverage with a traditional endowment policy is beyond reach for most youngsters. However, when you understand what is a term insurance plan, you will know that it is an affordable way to avail of a higher sum assured.
- Beneficial riders
To enhance the total coverage, you may opt for beneficial riders such as critical illness or accidental death cover. Other useful riders include loss of employment, disability cover, and waiver of premium. When understanding the term plan meaning and riders, it is important to know that the former is available at an extra premium.
- Increasing cover
Some insurance companies provide versatility to increase coverage at crucial stages in your life. For example, you may increase the sum assured when you get married or have a baby. This flexibility allows you to start with minimum coverage while enhancing the same as your goals change during your lifetime. Be sure to understand increasing cover when you first understand the term insurance meaning and its features.
- Innovative offerings
Insurers are adopting innovative and unique features to provide greater benefits to term plan buyers. The companies offer a lower premium for non-smokers. Additionally, you may not need to undergo the medical checkup at the time of applying for the policy.
It is very easy to know the term policy meaning as several online resources offer detailed information about these plans. Moreover, most insurance companies provide the features of term plans offered by them. It is that recommended you compare different products offered by the insurers to make an informed decision.