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Term Life Insurance Plans Are a Necessity - Here's Why

In the case of term plans, there are no maturity benefits, except if you have opted for the return of the premium rider. It ensures that all the premiums you have paid to the company are returned in case you survive the policy term.

Representational Image
Representational Image

With a term life insurance, a policyholder insured himself for a certain sum assured for a fixed period or term. During that time, the insured will pay a premium annually (or any other periodic mode of payment). The main feature of a term policy is that it ensures the life of a person against sudden death. If the policyholder dies at any time before the end of the policy term, the insurance provider is required to pay the sum assured to the nominees(s) of the insured. This is especially so if the policyholder is the primary breadwinner of the family. The sudden death of the earner in the family can have disastrous consequences on the family's finances. Term policies protect against such events. 

Policies With Benefits Of A Term Plan 
In the case of term plans, there are no maturity benefits, except if you have opted for the return of the premium rider. It ensures that all the premiums you have paid to the company are returned in case you survive the policy term. There are other forms of life insurance which provide maturity benefits. One of them is ULIP.
In the case of a Unit-linked Insurance Plan, the policyholder can be eligible for dual benefits. Along with protection against financial crisis in the event of death, like a term policy, there is an added element of investments and wealth creation. This can be advantageous in many ways. There are times when a sum of money is required urgently. A ULIP policy comes in handy when this sort of financial requirement presents itself. It is possible that the savings account may not have enough or that it cannot be emptied for apparent reasons. In such cases, a partial withdrawal from your corpus is the answer. This is easy to get and depends on the net asset value of your accumulated units. It can help in meeting the emergency need for funds. Therefore, there is always a fallback if you have a ULIP policy. 

Term Life Insurance For Securing Future
Every family will have certain expenses that need to be met at a time in the future. The cost of higher education for children or marriage expenses. These expenses should be planned for and factored in when buying term life insurance policies. The applicant must figure out how much will be needed, factoring for inflation. It is then necessary to check on the premium payable for the amount of sum assured needed. The most convenient method to do this is to use a term plan premium calculator . This piece of software allows you to get the exact premium amount for a given sum assured. All you are required to do is enter the sum assured, the tenure, and some personal details and the calculator will calculate the amount of premium. It is also possible to reverse calculate from the premium planned to find the sum assured. 

Remember that the sum assured will always stay the same throughout the policy tenure. Therefore, it is crucial to choose the sum assured carefully. It should ideally be about 20 times your current annual salary. While the results are not entirely accurate, an approximate value will help make an informed decision. This is because bonus declarations are not the same every year and may vary. But a comparable figure is available. 

The other factor which makes a term life insurance policy important is the additional riders. An accident rider can be included at the time of signing the policy. This rider means that the family gets double the sum assured in case of accidental death. If the accident does not result in an untimely demise but incapacitates the insured, the insurance company makes a lump sum payment. This helps take care of costs that are needed at the time. Since incapacitation affects the earnings of the individual, such a sum ensures that the family is not in immediate financial distress. 

A term life insurance policy provides the surity that the future financial needs of your family are met in your absence. The premium payments must be within the person's financial capability to apply for such a policy. The premium payment system must be determined in advance. If necessary, monthly premiums may be paid quarterly or half-yearly or as a single annual premium, whichever is convenient.

A term life insurance policy is a protection, and every family should have one or more than one maturing at different times in the future.

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