want to know about best describes term life insurance ? if yes then this article is for you after reading this article you will have the complete information about the term Life Insurance.
The term life insurance policy provides protection coverage by charging a premium for a specified time period of up to 30 years. It is slightly different from life insurance as in term life insurance you are getting coverage for a fixed age span instead of whole life as in life insurance. This helps you insure your most important part of life only that result in lower premium costs. Death benefits are provided to the beneficiaries too.
Why Term Life Insurance?
People take the term life insurance to secure their premium years of age while they have any loan/debts or some challenging activity in their life. Parents wanting to support their children till they stand on their own or the business that want to ensure their financial security in case of any unforeseen situation, prefer to take the term life insurance and its benefits.
Some other reason to look up for the term life insurance is the fixed premium policy. Once they choose a coverage amount, they are required to pay a fixed amount defined. This can be explained by the fact that the term life insurance is a insurance policy that is fixed for a span of years over a fixed premium amount for a certain coverage.
However the term life insurance do not have any cash payout after policy expiration, it only secures the policyholder over a period of time. This means the policy holder have the financial security in the policy period by paying a certain premium amount. However some company provide survival benefits too but is not limited to each term life insurance provider.
What is “Term life insurance” ?
A term life insurance policy is a financial security for the policyholder over a span of time. The premium amount is fixed for the entire period according to the coverage amount required by the policyholder. This ensures the policyholder in the time period and resulting in complete peace of mind for family/business. Unfortunately, if the policyholder passes away within the term, the beneficiaries is provided with death benefits
For example :- A policyholder takes the term life insurance for say 20 years. He is getting complete financial security in the entire period. In case the policyholder dies with in that 20 year term, then the beneficiary will get total death benefits. But in case if the policy expires before the policyholder’s death, the beneficiary will not be getting anything.
Benefits of the Term Life Insurance ?
Let us know about some of the benefits of the term life insurance :-
- Affordable Premium – The premium amount paid by the policyholder in term life insurance is lesser than other life insurance policy as the policyholder is covering only selected years of his life in term life insurance as Compared to the entire life in the other life insurance.
- Flexibility of coverage – The policyholder get to choose their coverage amount and the policy time ranging from one to 30 years according to their need and budget. Thus the policyholder can control their premium amount by choosing their perfect coverage amount.
- Flexible conversion – The policyholder may choose to convert their term life insurance into a full life insurance if they require coverage for their entire life.
- Death benefits – The death benefit is provided to the beneficiaries if the policyholder goes through unfortunate death.
- Ease of buying – You can purchase a term life insurance in a few click at the comfort of your home. In a very short span of time you can choose a perfect term life insurance for you from the comfort of your home in the modern digital era.
- Tax benefits – The policyholder get multiple tax benefits of buying a term insurance plans with tax benefits at the coverage too.
Drawbacks of term life insurance
Now let us know about some of the cons of Term Life Insurance :-
- Age dependency of premium – The premium of a term life insurance depends on the age of the policyholder. This means the older the policyholder is, the more the premium amount is.
- No cash benefits:- There is no cash benefits at the expiration of the policy in the presence of the policyholder.
- No investment – The term life insurance cannot be seen as a investment option as there are not any maturity benefits. Only the death benefits and survival benefits(in some policies) are provided.
- No surrender value – In case the policyholder stops paying the premium the policy stops automatically. But not all the companies offer the surrender value.
How to choose a term life insurance online ?
There are some of the factors that you may consider while choosing a term life insurance online, let us discuss those :-
- Analyze your financial needs – Before purchasing any term life insurance you must fully understand the complete financial need and requirement of your family. You must analyze your income and expense of your family as in case of your absence it may be require an amount that will help and support your family.
- Estimate premium amount – As you have an analyzed your financial needs it is very important to check different kinds of term insurance plans such as a basic term insurance plan, term insurance with survival benefits, term insurance with various payout options, etc. The ideal coverage amount you should think of is about 15 to 25 times your annual income for term life insurance.
- Check claim settlement ratio –Before proceeding to purchase a term life insurance you should check claim settlement ratio of different term life insurance provider. Higher the claim settlement ratio, higher the chance of settling your claim. So you should always choose insurance provider with higher claim settlement ratio.
- Select riders for additional coverage – According to your need and preference you can customize your term life insurance. The financial protection or you can say extra layer of financial protection is provided by riders or different kinds of additional coverage available out there that are not insured under normal term life insurance.
- Pay the premium amount – Now as you have completely customized your term life insurance it is time for the payment. Pay for the premium amount online and now that term life insurance for you have been successfully purchased.
How much coverage is required
The amount of coverage required is totally on the policyholder’s requirement and the budget. Remember one thing that the premium amount will depend on the amount of coverage required by the policyholder. So choosing a coverage amount may be some time consuming task for a policyholder.
Now as we completely understand about the term life insurance it is important to know that the coverage amount is totally upon the policyholders need and the budget and the premium amount depend on that coverage amount chosen. The term life insurance can be seen as a financial security and not as an investment opportunity. Now as you have completely understood the term of insurance in complete detail I think it is easier for you to decide a term life insurance for you according to your need .
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