It is essential for every individual to cover his/her risk so as to make sure his/her dependents are not stranded when he/she is not around to financially support them. While it is imperative for everyone to get a life insurance policy, it is particularly important for auto fanatics to get a life cover. Since their risk on the road is high, it would be wise to purchase an insurance policy. The simplest and most affordable insurance policy in the market is the term insurance plan. It provides high financial security to family members in the absence of the policyholder.
It is a type of life cover that offers protection for a specific period of time. On the death of the policyholder during the policy term, the death benefit is payable to the nominee. Term insurance plans are considered economical due to the high coverage provided, though only a nominal premium is paid towards the policy.
Single, as well as joint term insurance plans, are available in the market. Single plans offer life cover for a single person whereas joint plans cover more than one life.
Being the cheapest insurance type in the market, many different insurance companies offer term plans for a range of sum assured amounts. The prospective policyholder can choose the sum assured amount depending on the level of financial aid his/her family might need in his/her absence. The regular premium amount payable is calculated based on the type of plan, the sum assured, and the age of the life assured.
Most insurers generally set the minimum age for entry to a term insurance policy as 18 years and maximum as 65 years. In order to reap maximum benefits, one can choose to purchase more than one term insurance plan.
In case of death of the policyholder, the death benefit equal to the sum assured is payable to the nominee. The policyholder can choose whether the nominee receives the benefit as a lump sum or as regular payouts. Unlike other life insurance plans, basic term insurance plans don’t generally have maturity benefits.
Additional benefits called riders can be availed on paying certain extra charges.
Waiver of premium
If the policyholder suffers a physical disability, it will automatically affect his/her earning capacity. So the Waiver of Premium rider waives off all future premiums payable. The policy remains active in all respects, nonetheless.
Return of premium
If the policyholder survives the policy term, all premiums paid will be returned to him/her at the end of the tenure. This rider makes the term plan a great investment option.
Disability benefit
This benefit is provided to individuals who are permanently disabled. They receive a certain amount of the sum assured for a specified period of time.
Accidental death
An additional amount of money will be provided to the nominee if the policyholder succumbs to injuries suffered in an accident.
Critical illness
If the life assured is diagnosed with a critical illness mentioned in the company’s policy document, he/she is provided a certain amount for the treatment of the illness. The insurer specifies whether the policy will continue or be terminated after such payments.
If death occurs due to a critical illness listed out in the policy, the nominee is paid an additional amount of money along with the death benefit.
Income benefit
With this rider, the policyholder’s family receives a supplementary income for a fixed period of time which is above the sum assured of the policy.
The premiums paid towards the policy and benefits received qualify for tax benefits under section 80C and section 10(10D) of the Income Tax Act, 1961 respectively.
Bindu Singh: Flamingo Insurance Consultant