All About Term Insurance Plan
Term insurance plan is a must for a person who has dependents or a family. It is a well accepted fact that a term insurance plan provides the most ‘value for money’ proposition. So, what is the difference between a term plan and any other life insurance plan? Term insurance is the simplest or the purest form of life insurance. In this case, provisions are put in place in the event of the demise of the insured person, The family of the deceased is paid a pre-determined amount as part of the coverage.
Say for instance, a person bought a term insurance plan for a sum of Rs. 30 lakh. The tenure or the term of the policy is 20 years. So, if the insured person passes away in the duration when the policy is valid, the family will be paid a sum of Rs. 30 lakh. But there is also a downside to it.
So for instance, the insured person happens to outlive the tenure of the policy, all the amount paid in the form of premiums will be forfeited by the insurance company without any benefits to the insured or his/her family. Essentially all the premium will go down the tubes.
Another important aspect of life insurance is to ascertain the safety net which the family of the insured will require in the event of the demise of the insured. The calculation is done by keeping a view on the present standard of living of the family and the funds that would be required in order to continue living with the same standard of living. Also to be considered are the various important events that are imminent like marriages, higher education etc; and the debt that the deceased must have left behind unpaid.
After the calculation of the aforementioned future expenses the person can come to a definite number or the coverage which he/she may require in order to provide for the family or dependents so they can continue their present standard of living.
However, there is one major hurdle that prevents people from purchasing a term insurance plan; it tends to create a mental block as it deals with the death of the person. But it is morbid. As the rationale behind buying car insurance is exactly the same as buying a term insurance plan.
If the car, a person is driving, meets with an unfortunate accident or in the event that the person has to pay damage charges to the other party, the insurance provider will compensate for him/her. On the other hand if the person is a relatively safe driver and avoids any accident, the premium goes down the tubes.
Thus, there are apparent advantages and disadvantages of term insurance plans vis-à-vis other forms of life insurance.
Article Source: http://www.indiainfoline.com/Markets/News/What-is-Term-Insurance-Plan-in-India/5316085005
Say for instance, a person bought a term insurance plan for a sum of Rs. 30 lakh. The tenure or the term of the policy is 20 years. So, if the insured person passes away in the duration when the policy is valid, the family will be paid a sum of Rs. 30 lakh. But there is also a downside to it.
So for instance, the insured person happens to outlive the tenure of the policy, all the amount paid in the form of premiums will be forfeited by the insurance company without any benefits to the insured or his/her family. Essentially all the premium will go down the tubes.
Another important aspect of life insurance is to ascertain the safety net which the family of the insured will require in the event of the demise of the insured. The calculation is done by keeping a view on the present standard of living of the family and the funds that would be required in order to continue living with the same standard of living. Also to be considered are the various important events that are imminent like marriages, higher education etc; and the debt that the deceased must have left behind unpaid.
After the calculation of the aforementioned future expenses the person can come to a definite number or the coverage which he/she may require in order to provide for the family or dependents so they can continue their present standard of living.
However, there is one major hurdle that prevents people from purchasing a term insurance plan; it tends to create a mental block as it deals with the death of the person. But it is morbid. As the rationale behind buying car insurance is exactly the same as buying a term insurance plan.
If the car, a person is driving, meets with an unfortunate accident or in the event that the person has to pay damage charges to the other party, the insurance provider will compensate for him/her. On the other hand if the person is a relatively safe driver and avoids any accident, the premium goes down the tubes.
Thus, there are apparent advantages and disadvantages of term insurance plans vis-à-vis other forms of life insurance.
Article Source: http://www.indiainfoline.com/Markets/News/What-is-Term-Insurance-Plan-in-India/5316085005
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