The ongoing coronavirus pandemic is forcing the world to adapt to a new reality. We are witnessing a dramatic restructuring of the economic and social order to pave the way for the ‘new normal’.
While most Indians viewed insurance as an added expense to their monthly budget, this pandemic has made us realize the significance of life protection and health to sail through any financial hardships. There is a major shift in mindset and customers are increasingly looking at purchasing protection led insurance plans.
As Aristotle rightly put it, “It is during our darkest moments that we must focus to see the light.” Thus, the pandemic has also proven to be opportune for customers to choose the right life insurance plan ensuring an individual and their family have adequate financial security in case of an eventuality.
For those considering a life insurance solution, here is what you need to know about a Term Plan
Amongst the several life insurance policies available, term insurance is the most cost-effective plan one can avail. Term plans charge a fixed premium for the policy period and do not offer any added bonuses or maturity benefits in case the insured outlives the term assured. The premium rate for this plan is low as compared to other savings or investment life insurance plans. However before finalizing any policy, consumers should evaluate their need of insurance and opt for a plan which gives them the widest coverage at best possible rates.
Most traditional Life Insurance plans entitle customers to a maturity benefit that is pre-decided and specified. Therefore, if a policyholder survives the phase, she/he earns a particular gain from maturity. Life insurance plans primarily differ in terms of price and features. An individual can choose from policy options like, Protection plans, Whole life insurance plans, Money-back plans, Pension plans, Endowment assurance plans, Unit linked insurance plans, and Child plans. It is therefore essential to checkout plans that best suits one’s budget as well as requirement.
Term insurance v/s life insurance
• Coverage: In term insurance plans one can only avail coverage against untimely death. However, most forms of savings or investment life insurance policies have a maturity advantage. They cover both, sum assured to nominee in case of premature death of the policyholder, and maturity benefit to the policyholder at the end of the policy term.
• Premium: Only the risk of untimely death is provided for by term insurance policies. This is why term plans have premiums that are incredibly low and affordable. At competitive premiums, you can purchase high sum assured covers. Other life insurance policies have a lower Sum Assured coverage on death as they promise a maturity gain as well. Thus, premiums are higher than term plans.
• Coverage duration: Term plans come with long-term durations of coverage that can go up to 67 years or 81 years in case of Whole Life cover. However, most forms of savings or investment life insurance policies may be taken for shorter periods as the tenure begins at 5 years and goes up to 30 years, in some instances like whole life it may go up to 81 years.
It is always beneficial to start young and plan your investments according to your financial goals. One should choose a life insurance plan based on specific needs and the finances available. It is therefore beneficial to invest in both savings/investment plans and term insurance as the former provides investment returns along with life protection while the latter ensures you secure the financial future of your dependents at a nominal premium.