5 Reasons Why Term Insurance Plans are a Must Have

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Term Insurance Plans
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5 Reasons Why Term Insurance Plans are a Must
Have
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With life insurance being an integral part of an
individuals financial planning exercise, a lot
of focus has been given to life insurance
products such as term insurance plans (also
referred to as protection plans). This article
will decode this insurance plan thats garnering
a lot of attention. To begin with,
insurance products fall under two broad
categories pure risk cover and savings, and
risk cover. But the purpose, nature and benefits
of each of the products under each of these
categories are significantly different. Protectio
n plans as risk covers, only  A protection plan
would typically fall under the pure risk cover
category as the product is made up of only the
protection element, and no maturity benefit is
associated with the policy. This policy will only
make a payment at the occurrence of a precise
event i.e. death. While this might suggest that
a large proportion of policyholders taking these
policies never receive a payment as they outlive
the policy term, they and their families are
provided with valuable financial protection in
the unfortunate event of a claim occurring.
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Protection plans are cost-effective With a
protection plan, a mere sum of Rs 2508 annually
(exclusive of service tax and educational cess)
could help provide a financial cushion of up to
Rs 10,00,000 at the event of death of the
policyholder (example based on a male
policyholder aged 25 years with a 25 years term).
In fact, buying term insurance plans online can
be even more cost-effective. The perfect
insurance plan for all Term plans are insurance
products in their purest form. These plans are
designed and priced so that the policyholders, as
a group, are effectively pooling their premiums
in order to pay a benefit for a relatively
infrequent, but significant event that might
occur. This means that for each policyholder
the cost of providing the cover is relatively
modest in comparison to the benefit that would be
provided if that event occurred. With no savings
element attached to it, the life insurer does not
incur any expense in terms of managing the funds.
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Suitable for single bread earners  A term plan
is ideally suited for individuals who are the
single bread earner of the family with high
financial liabilities. Usually, low income, high
financial liabilities, dependent spouse and
children, and good insurable health are the
factors that trigger the choice to get a term
insurance. As always, the fundamental principle
remains the same. Its advised to start at a
younger age as premiums will be low. Also, when
the insured is young, he/she can avail of longer
term coverage such as 30 years. Protects
dependents from short-term liabilities Term plan
is ideal for an individual to protect dependents
from any short-term liability such as a house
loan, childrens education in case of death. The
ideal time to buy term insurance is when an
individual has debts that are expected to end
after a specific period of time. Similarly, term
plans can be used as a cover against car loans,
short term loans, etc. Choosing to purchase
a life insurance policy to protect ones
financial dreams and aspirations is a wise
decision. It is important that the insurance is
purchased according to ones financial needs.
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To know more on Term Insurance Plans
https//www.bajajallianz.com/Corp/term-insurance/
isecure-insurance-plan.jsp
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