What is term insurance?
A term insurance is a type of life insurance plan, which provides life coverage in case of the policyholder’s unfortunate death. This enables one’s family to continue to afford a decent standard of living even if any unforeseen miss happening occurs in the life of the policyholder. Term insurance plan is purely an insurance plan and does not have any savings component in it. Hence, a term insurance plan cannot be used for investment purposes.
In a term insurance plan, the nominee receives the death benefit either in lump sum amount or in instalments if the policyholder dies during the policy term as per the product terms and conditions. However, term insurance plans do not offer any maturity benefit. Term insurance plan premiums are comparatively lower, hence making it a highly affordable option to secure the life of your family and your wealth.
A term life insurance takes care of the lives of your dependents through a predetermined sum paid to your nominee/beneficiary in case of any untoward situation.
There are several benefits of availing a term insurance plan. Since there is no maturity benefit in a term insurance plan, the entire premium goes into covering the lives of the policyholder and his/her family. In a term insurance plan, one gets higher coverage with a low premium. The amount insured, which is chosen by the policyholder in a term insurance plan, can help cover outstanding loan or liabilities, if any, in case of any unexpected circumstances. This takes care of the ability of your family members to repay the loans with the sum assured amount and that they do not face financial obstacles in meeting their life goals in your absence.