Term plan is a feature-intensive policy in the insurance industry. If you take up the research of term plans, you will realise how many strong benefits and factors are advantageous for your loved one’s financial stability after you.
Hence, we can say you make one of the best decisions of your life when you buy a term plan. It is not said enough how important it is to buy a term plan that suits you the best. This will only increase the term insurance benefits the company provides the policyholder.
Insurance plays a crucial role in providing you with the security you seek in future. Term policy is a popular type of insurance that offers a cost-effective way to ensure the financial safety of your family in case of an unfortunate event. Understanding life insurance, particularly a term policy in detail is important to make an informed decision regarding its purchase.
Let us discuss the meaning of a term plan and its features.
Table of Contents
Definition of Term Plan
It is a policy that provides coverage for a specified term or period through the agreement made between a policyholder and policy provider is a term plan. Term plans typically do not have a savings or investment component.
Since the primary objective of a term plan is to provide a lump sum amount in order to provide financial security in case of the policyholder’s death, it does not have the cash accumulation factor to it.
Features of a Term Plan
-
Affordable in Nature
Term plans are typically very affordable. With an objective approach, these plans have a pretty reasonable rate and their benefits outweigh the cost. This rate is very less compared to life insurance premiums.
This makes term plans attractive for individuals who are looking to secure their family’s financial future without a significant financial burden.
-
Has Convertible Policies
Some term plans offer you provisions to convert the plan into permanent life insurance without the policyholder having to go through the usual medical examination.
This is a useful way to make the most of the financial opportunity if your financial situation changes. It also provides a more inclusive approach towards insurance.
-
Policy Term Options
Typically, there are various term policy options with every insurance company that allow the policyholders to make a decision that aligns with their needs and circumstances.
Term policy ranges from 5 years to 40 years, giving individuals the freedom to choose as per their preference and also providing a sense of stability as they move closer to their financial goals.
-
Provides Death Benefit
The primary feature of a term policy is providing death benefits in case of an untimely death of the policyholder.
In case of the insured’s death, their family will receive the sum assured for financial stability. This ensures that the family’s financial needs and obligations are taken care of even when the breadwinner is no longer around.
-
Flexibility in Premium Payment
When it comes to term policy premiums, the policyholders get to choose from various premium payment options.
They have annual payments, semi-annual payments, quarterly payments, and monthly payments. The policyholders can choose the policy based on their preferences.
-
Provides Rider Benefits
Riders, also called add-ons, are additional benefits that you can choose from the company’s list.
These additional benefits will increase the cost of your policy, but they provide great paybacks. Some of the common riders are accidental death benefits, critical illness benefits, waiver of premium, and disability benefits.
Conclusion
Having a term policy by your side will be a comforting security for you. It provides peace of mind, financial stability to your family, and a sense of honouring your responsibility. When you evaluate all the features of your term policy, you will understand more about them and it will make it easy for you to make informed decisions.
It’s crucial to carefully compare and select a term plan that aligns with your financial goals and offers comprehensive coverage tailored to your circumstances.
