Life’s uncertainties can turn up when you least expect them. And while it is not easy to predict what emergency may crop up when, it certainly is easy to be prepared for such situations. If you’re wondering how this is possible, the answer lies in term insurance. It’s affordable, it offers a large life cover with several other optional benefits, and it can be customized as per your needs.
Let’s take a look at how term insurance plans work.
How Term Insurance Works
Term insurance plans offer you a life cover over the duration for which the plan is valid. In case of the life assured’s demise during this period, the death benefits guaranteed under the term policy are paid out to the nominee assigned. Being pure protection plans, term insurance policies are cost-effective type of insurance. You can get a higher sum assured in term insurance plans by paying comparatively lower premiums. If you’re unsure about the amount of sum assured you need, you can always make use of a term insurance calculator online.
Now, when it comes to premium payment, the duration over which you have to pay that premium can be customized. And based on the premium payment term, there are different types of term plans. In this context, the most common type is the regular premium term insurance plan. Let’s see what it’s all about.
What is a Regular Premium Term Insurance Plan?
A regular premium term insurance plan is simply a kind of term plan where the premium payment term is the same as the policy tenure. So, this means that you will have to continue to pay premiums from the date you purchase the policy to the date the policy term ends. Let’s look at an example to understand this better.
Say you use a term insurance calculator and see that you need a life cover of Rs. 1 crore. So, you purchase an appropriate term plan with a policy term of 30 years. If this is a regular premium term insurance plan, your premium payment term will also be 30 years. So, you will have to pay premiums to the insurer till the policy term ends (or till the insured incident occurs, whichever is earlier).