How is Term Insurance Policy Helpful?

An unfortunate event like death or accident can put the future of your dependents on a high risk and especially if you are the single breadwinner of the family. A financial uncertainty with the pain of your loss could prove to be the worst nightmare for your family. Even after knowing such disastrous situation could happen, many people don't opt for the perfect solution to all these problems, which is a life insurance policy. One of the most basic reasons is the price, but thanks to term insurance plans which allows you to cover the risk of your life at a very low price with high coverage amount.

In addition to protection against life, a term insurance policy could be helpful in many situations and we have outlined some of them in this article

Helps you to get life insurance at an affordable price

Term insurance policy gives you the option of getting life insurance at a very economical price with a high cover amount. The premium rates offered in the term insurance plans are very low because of the liabilities of insurer are limited to the life of the insured person only, without any saving and investment option. That's why a term insurance policy is called as the purest form of life insurance policy. If you are looking for a term insurance policy with a tight budget, then a term insurance plan will fit into your needs perfectly.

Acts as a risk management for loan and debt

A term insurance policy also helps you to manage the risk related to your loan and debts. This is possible because in term insurance policy, you can choose the policy term according to your need. For example, if you have a home loan of 1 crore for 13 years, then you can buy a term insurance plan of more than 1 crore for the same number of years as the loan term. So even in the case of your death, your dependents will not have to bear the burden of the loan and debts taken by you.

Gives you a replacement for monthly income

You can use your term insurance policy as a replacement for monthly income after your demise. The dependents go through a deep emotional trauma because of the loss of the breadwinner of the family and financial uncertainty without any source of monthly income adds up to their pain. Well, you can make a replacement for your monthly income through a term insurance plan as it gives you the option to receive the death benefit as monthly income also. You can receive your sum assured as monthly income for a specific period of time or you can receive it at once also. For example, if you have sum assured of Rs.1 crore under your term insurance policy, then you can receive Rs.1 lakh per month for 8 years and 4 months (total 100 months) or you can receive Rs.1 crore at once, at the time of claim.

Allows you to enhance protection by adding riders

A Term insurance policy gives you the option to enhance your protection beyond the basic cover by adding riders. A rider is an additional benefit which can be added to your term insurance policy by paying an extra amount of premium. A useful rider added to the term insurance policy can do miracles to your policy in critical situations. Following are the different type of rider available with term insurance policy:-

· Critical illness rider

· Waiver of premium

· Accelerated sum assured

· Partial and permanent disability

· Accidental death and dismemberment

Offers a lot of flexibility to fit into your requirements

A Term insurance plan comes with a lot of flexibility which allows the buyer to customize it according to their need. Some of the flexibilities offered in term insurance policies are as follows:-

  · Convertibility

After buying a term insurance policy, if you like going for a whole life insurance due to the change of your financial needs and goals, then you can easily convert your term insurance plan into a whole life plan without any hassle. You don't need to drop your current term insurance policy and buy a new life insurance policy because the convertibility of term insurance policy allows you to convert it into a whole life insurance policy. You will not have to go through medical examination also, if you opt for converting your term insurance policy.

  · Choose the policy term

The USP of term insurance plan is the option to choose your term plan, so that you don't have to pay premiums for your whole life. Different insurers offer different policy terms to choose from, like 10, 15, 20 25 or 30 years.

  · Cover enhancement

The sum assured chosen by you for the term insurance policy can be enhanced at important stages of life like marriage and turning into parents. This unique feature of term insurance policy allows you to increase your cover, according to the increasing responsibilities and keeps you away from buying a new insurance policy because of the increase in the number of dependents.

  · Easy opt out

Opting out of the term insurance policy is not a loss for you because there is no maturity benefit or return on investment linked with the term insurance plan. So you have nothing to lose when you opt out of your term insurance policy.

A term insurance policy can be helpful in many circumstances of your life and it all depends on the type of term insurance policy you choose and the way you customize it according to your needs. Avail the various benefits and flexibilities offered in a term insurance plan by understanding them well.