Despite their increasing popularity, many people still have questions like ‘what is a term plan?’ So, let’s start off by addressing this query. A term plan, also known as a term insurance plan, is one of the affordable ways to ensure that your family stays protected financially. It is basically a contract between an individual, known as the policyholder, and an insurance service provider.
A term plan provides the policyholder with a life cover of a predetermined sum of money for a specific period of time, known as the policy tenure. If the policyholder dies within the specified period, his nominee would receive the predetermined sum of money, known as the death benefit payout, from the insurance service provider. Nominees can then use this payout to meet their lifestyle expenses.
However, in return for this life cover, the policyholder would have to make regular payments, known as premiums, to the insurer. These premiums generally would have to be paid regularly without any fail. As long as the policyholder pays these premiums, they get the benefit of the life cover. Here’s a quick tip. Make use of a term insurance calculator if you’re unsure of just how much premium you would have to pay for a term plan.
As you can see, a term plan plays a crucial role in the financial protection of your family. And so, it is important to constantly keep it active. Otherwise, you might lose the protection. Here’s where term insurance renewal comes into the picture. Let’s take a more in depth look at this concept.