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Know These 4 Facts Before Buying Term Insurance

Select a term plan that can meet your family's financial goals so that they can live a peaceful life even during your absence

Tuesday October 27, 2020 10:22 PM, ummid.com News Network

Term Plan

Your family's financial aspirations and well-being can be in danger if something unfortunate happens with you. If you do not want your family to face financial hardships in the future, it is time to buy an ideal term insurance plan and provide your loved ones with the necessary financial protection that they deserve. If you are wondering about the term plan meaning, let us explain it to you.

A term plan is the simplest and purest form of life insurance. Investing in such a plan is one of the safest ways to safeguard the financial interest of your family members when you are no longer around.

Term insurance plans have emerged as one of the most popular investment instruments, as they provide a high life cover at a reasonable premium. However, there are many misconceptions about the term plans prevalent in the market that can confuse potential investors.

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Here is a list of a few factors that can clear the misunderstandings about a term policy and help you purchase an ideal plan.

1. Term insurance provides only death benefits

One of the most prevalent myths about a term plan is that the insurer only offers benefits after the policyholder's death. This myth is true as term life insurance is made to provide financial support to the family in case of the insured’s untimely demise within the policy's tenure.

Today, various types of term life insurance plans are available in the market that offer multiple benefits to fulfill your numerous needs. For instance, the term insurance with return of premium (TROP) policy is a type of term plan that provides death benefits, and you can get back the premiums paid towards the policy if you survive the tenure of your term plan.

Similarly, various other riders like accident disability benefit rider and critical illness rider can provide financial security if you cannot work to earn your livelihood.

2. People buy term plans to save tax

Tax-saving is one of the term insurance benefits, but it does not mean that people should buy term insurance considering the amount of tax they need to save.

Here, the people are missing the policy's primary fundamental, which is to protect the financial future of their loved ones when they are no more.

3. People compare term insurance with other investment instruments

Term insurance is a pure and straightforward type of life insurance plan that does not provide any returns. So when you buy term insurance, it is wrong to compare it with other investment avenues based on the percent of returns offered.

The only return you can earn from such a plan is peace of mind, as you know that your family can live a financially independent life if you are not them to take care of their monetary needs.

Investment instruments like mutual funds and Unit-Linked Insurance Plans (ULIPs) provide market-linked returns. If you want to maximize the investment returns, it is advisable to diversify your investments in various financial products.

4. People with medical conditions can purchase term plans

While buying a term plan, you may have to undergo a medical test to assure the insurer that you do not have any health ailments. People with health conditions have a high risk of mortality; therefore, many insurance companies do not provide the policy to them. However, there are a few insurers that offer such people a term plan but at higher premiums.

Investing your hard-earned money in a term plan will be one of the best important financial decisions of your life. Shield the financial future of your loved ones by reaping the term insurance benefits of high sum assured and pocket-friendly premiums.

Thus, select a term plan that can meet your family's financial goals so that they can live a peaceful life even during your absence.

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