Introduction to term plan
Term plan, as term insurance is often called as, is a life insurance policy purchased for a set tenure. The insurance is realized upon the policyholder’s death during the tenure for which the insurance was taken for. This is called death benefit and is paid by the insurance company to the family of the policyholder, called beneficiaries. Purchasing a term plan is essential to secure financial security of the beneficiary if the primary breadwinner of the family for whom the cover was insured passes away.
Understanding Term Plan
A term plan is a comprehensive and a large amount of money given to the beneficiary at a small rate of premium. The amount of premium paid is even lesser if the insurance was purchased even earlier. Some companies also offer coverage for partial or permanent disability in cases the flow of income is disrupted during the tenure insured. In the market, term insurances are called the pure form of life insurances available. There are usually three parts to an insurance policy: mortality charge (the premium), administrative and documentation expenses, and maturity benefits. Many term plans do not provide maturity benefits, which also thus reduces the premium payable by the policyholder. Term plans are the cheapest possible insurances that provide the highest coverage. At its best, term plans provide a horde of other benefits that increase its premium. Some provide cover over critical illnesses, death or bearing medical expenses upon accidents, pay extra on death in the form of maturity benefits, etc. Thorough research and comparisons are often advised before purchasing a term plan.
Highlights of Term Plan
Term plans can be availed with add-ons, even after purchasing the policy. If a policyholder purchased a plan at 20 with the bare minimum necessities, they will be able to add on insurance coverage for disabilities, benefits for their spouses and family, and more during the course of the plan. These are also called riders. Some plans offer monthly payouts instead of dumping the lump sum death benefit to the family. It may serve as regular income for the family.
