Life is unpredictable. No matter how well you plan, you cannot foresee the future. That in itself is the beauty of life.
Life brings with it a lot of good things, like family, loved ones, moments you never want to forget and relive constantly. But all good things come to an end, and sometimes abruptly and prematurely.
While nothing can ever replace your presence, life insurance can and will at least ensure financial protection and stability in the short run. It helps people cope better with tragedy, and honor the memory of their loved ones, instead of wondering how they will pay for their basic necessities.
Term insurance is usually the most uncomplicated and least expensive way to be protected against untimely loss of life.
Why Term Insurance?
So what is a Term Insurance? Simply put, term insurance is life insurance in the purest form. In term insurance, you pay a premium for a pre-determined period of time that can range anywhere from 5-40 years depending on your age. In case of an unfortunate loss of life, during that period, your family or the beneficiary receives a cash lumpsum.
Putting in place term insurance is the most cost-efficient because it offers a significant life cover at a nominal premium. That being said, the cost of premium depends on a variety of factors like, term of cover, benefits chosen, age, health status etc.
Here are some reasons why you need term insurance:-
Death benefit offered
Term insurance offers a death benefit that helps your family deal with the financial demands after your death. They will have a lesser financial burden and can take care of their regular obligations as well as finance some big expenses like education, housing, major medical expenses, etc.
Read Lessons Learned From the Death of My Client here
Helpful in financing larger financial burdens
Usually, people finance the purchase of expensive assets through debt. Failure to pay the loan might lead to the loss of assets. However, if you pass away untimely, your family will be left in the lurch in such trying times. But with the help of a term insurance plan, you can secure your family against a massive debt burden. Your family can choose to repay the loans with the policy’s cover.
The working is simple
One of the major reasons behind the popularity of the term insurance policy is its simplicity. There are no complicated calculations, no market performance to worry about, or major changes in premiums. Once your premium is set, it stays on the same level throughout. That’s why it is also sometimes known as Level Term Insurance.
Huge coverage offered by Term Plans
Another big reason not to give term insurance a miss is the cover it provides compared to the premiums paid. Term insurance plan offers a much higher coverage, sometimes nearly sixty times that of traditional policies.
Premiums are locked throughout the plan
When you opt for a term insurance plan, you are locking the premium for the current as well as subsequent years. The earlier you buy the better, since at a younger age your premiums are lower, and stays the same for the rest of the insurance term.
Things to consider before buying a term insurance policy?
When you buy a term life policy, an insurance company commits to pay your beneficiaries a predetermined death penalty in case of your unfortunate death during the policy’s term. To be entitled to the benefits, you need to pay a monthly premium to the insurance company throughout the duration of the term.
Key points you must consider about term insurance:
- Life expectancy and risk are the underlying factors that define calculations behind life insurance rates. That’s the reason life insurance gets costlier as you age.
- If you live past your policy term, the insurance ceases to be effective and you need to buy another policy if you wish to continue the insurance. But here’s the catch, the annual premium for the new policy could be extremely expensive because you have aged and might also have a related health conditions. That’s why it’s imperative to choose a suitable term length at the outset.
- You may need to purchase an additional term life policy by paying extra charges if you find a term life policy that doesn’t offer adequate cover. Hence it is important that you also choose a policy that suits your and your family’s future needs.
At the end of the day, insurance is something you should have, but hopefully never need.
If all you want is financial protection against loss of life at minimal cost, a Term Insurance policy is ideal for you. The earlier you start the better.