A Term Plan is a type of life insurance plan which provides financial security to the family members of the policyholder in the event of their unfortunate demise. It includes receipt of death benefits, which will help the family members to meet routine expenses, like daily living costs, education, mortgage payments, income replacement, etc. Due to the non-involvement of the cash component, it offers an affordable premium amount, mainly for those with pre-existing medical conditions. Hence, a term plan offers financial stability in times of financial crunch due to medical expenses. Also, it provides additional riders, which help enhance the plan, offer safety, claim tax advantages & cover health-related risks as well.
Things to be considered while choosing a Term Insurance Plan for Family
The following are the things to be considered while choosing a term insurance plan for the family:
Choose an Appropriate Life Coverage
Decide on an appropriate life coverage amount, which would depend upon the annual income, monthly expenditures, financial stability of dependents, future financial obligations, etc. To ascertain this coverage amount, a human life calculator can be used.
Choose a Flexible Tenure
Decide on an appropriate policy tenure for which you want to be covered. Though most of the insurance companies provide an option to decide the policy tenure depending on their own convenience, you can still choose a tenure that best suits you.
Claim Settlement Ratio
The term Claim Settlement Ratio refers to the percentage of claims settled by an insurance company as against the total number of claims received during a year. Always choose an insurance company with a high claim settlement ratio as they provide a better scope of claims getting settled in future.
Additional Riders
The critical riders help enhance the coverage of the term plan at an added cost, such as accidental death riders, terminal illness riders, total permanent disability, waiver of premium, etc.
Claim Settlement Process
Choose an insurance company that offers hassle-free, easier & quicker claim settlement processes to avoid all the troubles that may arise at the time of grief.
Additional Benefits
Some term insurance plans offer additional benefits, such as special exit advantages, premium holidays, life stage advantages, etc., which may also be considered while choosing a plan.
Policy Documents
Go through the offer document carefully for better clarity of the applicable terms & conditions offered by the plan to avoid any hassle in future.
Compare Available Term Plans
Compare the available term plans & evaluate them on different benchmarks & parameters to buy the plan that best fulfils your requirements.
Advantages of a Term Insurance Plan for Family
Provided are the advantages of a term plan for the family:
Affordable Coverage
A term plan for a family is considered to be quite reasonable in comparison to an individual life insurance plan, which makes it an affordable & budget-friendly choice.
Death benefits
It includes receipt of death benefits in case of the sudden demise of the policyholder, hence providing financial security. This amount helps the family members to meet the routine expenditures, debt obligations, & acts as an income replacement.
Flexibility
It offers a variety of options to choose the most appropriate plan that best suits your requirements.
Coverage for a Specific Period
It offers coverage for a tenure ranging between 10 & 30 years, allowing the policyholders to decide on a term plan that best aligns with their financial objectives.
Simple
This plan is quite simple & straightforward to understand when it comes to buying a term plan.
Disadvantages of a Term Insurance Plan for Family
Provided are the disadvantages of a term plan for the family:
Limited Coverage:
This plan offers coverage till the end of policy tenure, after which the policyholder is not covered if they survive the policy tenure.
No Cash Value:
It does not involve any accumulation of wealth as it is not an investment.
Renewal Costs:
It requires policy to be renewed once the tenure is over, involving huge costs, especially when it includes senior citizens or individuals with prevailing health conditions.
Policy Termination:
This plan expires with the end of the tenure, which means the coverage terminates with the end of the policy, unless it is renewed.
No Living Benefits:
This plan does not involve any living advantages.
No Long-Term Savings:
There are no long-term savings options, because the death benefit is received in case the policyholder dies during the policy tenure & not after that.
No Tax Benefits:
There are no estate taxation advantages, because the death benefits are also received if the policyholder dies within the policy tenure.
How Does a Family Term Insurance Plan Work?
Provided are the steps to be followed while choosing the Best Term Insurance Plan in India via online mode:
Visit the Term Insurance Page:
Visit an entrusted website of an insurance provider & click the tab “Term Insurance”, which will provide you with a list of different plans.
Enter Basic Details:
Fill out the basic details, such as name, date of birth, gender, contact details, etc.
Add Occupation Type & Other Details:
Provide certain details, such as educational background, annual income, occupation, etc, ensuring the plan can be customised as per the requirements, as these factors affect the desired coverage amount.
Choose a Plan & Pay:
Compare all the available plans & choose one that best suits the requirements of the family. Next, proceed to make a payment & get the policy details.
Conclusion
A term plan is a financial product which ensures sufficient financial help to the family members of the policyholder, which will help secure their financial future. A family term plan comes with lots of benefits, tax benefits, coverage, etc., that offer financial protection to the family members. This plan covers all the family members under one single plan, ensuring mental peace & financial stability at a reasonable cost. Selecting an appropriate plan that ensures adequate financial coverage helps families beat all financial hardships.
