How Is a Term Insurance Policy Beneficial?

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How Is a Term Insurance Policy Beneficial?
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• In order to understand how a term life insurance
  policy can be beneficial to us, we first need to
  understand, what it actually is? In simple terms,
  an insurance policy that insures you for a fixed
  term or a fixed period of time is called a term
  life insurance policy. Here, the term is your
  life and the insurer insures you with a financial
  backing against loss of life. Such an arrangement
  is necessary for people who are responsible for
  the financial needs of others and need to ensure
  that they keep them provided even when they are
  not around. Hence if you take up a term insurance
  policy and unfortunately there is loss of life,
  the sum insured would be paid to your family or
  beneficiary. This way you can ensure that you
  take care of their financial needs even after you
  are not with them. A typical term insurance is
  cheaper in comparison to other insurance products
  and hence do not even put much of a strain on
  your pockets.

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• Term insurance is a little different from any
  other life insurance product. Most life insurance
  products cover you financially for life as well
  as promise you a fixed sum of money at the end of
  the agreed period. In case of a term insurance
  you get the financial coverage, but no money is
  earned at the end of the insurance term. The
  benefit of a term insurance here is the fact that
  a term insurance is the cheapest form of life
  insurance. The choice here is between an
  insurance that gives you a better coverage at a
  lesser cost and a policy that costs you a lot
  more but ensures a fixed sum of money after a
  fixed period.

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• Term Insurance comes beneficial for
  people who don't look at insurance as an
  investment, but as a security provider. Even when
  it doesn't earn you anything at the end of the
  policy's maturity, it provides security to your
  family and loved ones. Moreover, the fact, that
  it is the cheapest form of insurance it doesn't
  strain your pocket much and leaves with more
  scope to invest into other financial products.
  With some intelligent planning, one can have a
  good mix of investments in term insurance and
  other money earning products like ULIPS, mutual
  funds etc. The benefit of such a combination of
  financial products is that one has a good income
  from investments during his/her lifetime and in
  case of loss of life, the family and dependents
  get the secured amount from the insurance
  company.

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• However, one needs to be extremely careful in
  investing in any policy. A thorough research on
  all plans available is mandatory. Some points to
  consider before opting for a policy includes
• 1. Reputation of the Insurance Company - one
  should go only for a reputed and government
  recognized company to be sure of getting the
  claims settled legally
• 2.Clams Settlement Ratio - Also ensure that the
  Company has a good track record to settling
  claims. Companies that take too long to settle
  claims or reject too many claims should be
  avoided.
• The best policy to go for is always the one that
  gives you the maximum benefits for the least
  amount of premium. Go for a good balance between
  low premiums and required coverage amount.

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