With term life insurance, a policyholder insures himself for a certain sum insured for a specified period or duration. During this time, the insured will pay a premium annually (or any other method of periodic payment). The main feature of a temporary policy is that it insures a person’s life against sudden death. If the policyholder dies at any time before the end of the contract term, the insurer is obliged to pay the sum insured to the agent(s) of the insured. This is especially true if the policyholder is the primary breadwinner. The sudden death of the breadwinner can have disastrous consequences on the family’s finances. Temporary policies protect against such occurrences.
Policies with term plan benefits
In the case of term plans, there are no maturity benefits unless you have elected to return the premium rider. It ensures that any premiums you have paid to the company are refunded in the event that you outlive the term of the policy. There are other forms of life insurance that offer maturity benefits. One of them is ULIP.
In the case of a Unit-Linked Insurance Plan, the insured can benefit from a double benefit. In addition to financial crisis protection in the event of death, such as a term policy, there is an additional element of investments and wealth creation. This can be advantageous in many ways. There are times when an amount of money is urgently required. A ULIP policy comes in handy when this type of financial requirement arises. It is possible that the savings account does not have enough or cannot be emptied for apparent reasons. In such cases, a partial removal of your corpus is the answer. It is easy to obtain and depends on the net asset value of your accumulated units. It can help meet the urgent need for funds. Therefore, there is always a fallback if you have a ULIP policy.
Term life insurance to secure the future
Every family will have certain expenses that will need to be met at some point in the future. The cost of higher education for children or wedding expenses. These expenses should be planned for and taken into account when purchasing term life insurance policies. The applicant must determine how much will be needed, taking inflation into account. It is then necessary to check on the premium to be paid the amount of the sum insured necessary. The most convenient way to do this is to use a term plan premium calculator . This software allows you to obtain the exact amount of the premium for a given sum insured. All you need to do is enter the sum insured, the duration and some personal details and the calculator will calculate the premium amount. It is also possible to reverse the calculation from the expected premium to find the sum insured.
Remember that the sum insured will always remain the same throughout the life of the policy. It is therefore crucial to choose the sum insured carefully. It should ideally be around 20 times your current annual salary. Although the results are not entirely exact, an approximate value will help in making an informed decision. Indeed, bonus declarations are not the same each year and may vary. But a comparable figure is available.
The other factor that makes a term life insurance policy important is the additional endorsements. An accident endorsement can be included at the time of signing the policy. This endorsement means that the family receives double the sum insured in the event of accidental death. If the accident does not lead to premature death but causes the incapacity of the insured, the insurance company pays a fixed indemnity. This helps to support the costs that are necessary at the time. Since the disability affects the individual’s income, such a sum ensures that the family is not in immediate financial distress.
A term life insurance policy provides certainty that your family’s future financial needs will be met in your absence. The premium payments must be within the financial capacity of the person to apply for such a policy. The premium payment system should be determined in advance. If required, monthly premiums can be paid quarterly or semi-annually or as a single annual premium, whichever is most convenient.
A term life insurance policy is protection, and each family should have one or more maturing at different times in the future.