Term Insurance Benefits In English
Term insurance is a type of life insurance. The policy provides cover based on the policy taken by the policyholder for a specified period of time. If you opt for this type of plan, the benefits are available only after the death of the policyholder. The monthly premium is very low compared to normal life insurance. But the value of the amount paid by you is not refundable. To put it simply, term insurance benefits are available only after death. Insurance companies determine the premium amount based on the individual’s health, age and life expectancy. Some companies offer certain types of policies only after medical examinations.
If the premium amount is fixed and you die while you are taking the policy, your family will get the insurance amount based on the face value of the policy you have taken. No amount is payable in case of death after expiry of the policy term. Instead you can renew the policy after the expiry of the policy period. But you cannot pay the old premium amount that you are paying. At the time of renewal you will have to pay the new premium amount based on your age life expectancy and medical test.
Table of contents
- Money back policy VS Term Insurance
- How much insurance to take
- Choosing an Insurance Company
- Reasons to Buy Term Insurance
Money back policy VS Term Insurance:
We may be confused as to which one to choose among these two types of policies, but you will most likely think of choosing the Money back policy first. Because after the end of the policy period you are in the hope of getting the money built up. However, if you think about it, the monthly premium amount of Money back policy is very high. In term insurance, you have to pay less than 700 ₹ per month for 50 years. Remember, 50 years is a very long time.
50 years = 600 month 600×685 = 4,11,000
If you take a money back policy or an endowment policy of ₹20,00,000 for 20 years, you will have to pay a reduced monthly amount of ₹3,500. 20,00,000 ₹ if you die within the policy term. After the policy term you will get the full amount. If you have to pay ₹3500 per month for 20 years, it is very difficult for common people to pay the premium amount for 50 years.
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Although the money deposited in the money back policy is returned, the monthly premium amount is high. Term insurance premium amount is very low. Even if you opt for Term Insurance and pay ₹700 per month policy and save ₹3000 per month in 8% p.a. interest scheme or Mutual fund, after 50 years you will get much more. By choosing term insurance we get insurance for 50 lakhs and corresponding savings amount.
How much insurance to take:
The question of how much insurance you should take is actually a very important one. If you are married and all the children are not college graduates then you should definitely take 10 times your annual income.
If your annual income is 5,00,000 lakhs then you need to take insurance for 50 lakhs.
Choosing an Insurance Company:
If you are ready to take term insurance, you should know about the company first. Today there are more than 100 insurance plans and companies. Accordingly, before taking a policy, you should know how many policies the company has given refunds to before. Apart from that, you should see the CSR levels of the company. CSR is a report that shows how many insurance claims a company has made and how many policyholders have been settled. First you need to know how many complaints have been filed against that insurance company. Based on these you should select a policy.
Reasons to Buy Term Insurance:
- If all your outstanding debts cannot be paid by your spouse and children then you must take a policy.
- • If till now your family has been running on only one of your salary then the policy is important if you want your family to be financially well off after you.
- • You can rest assured by taking these policies that your dreams of your children’s education marriage are definitely fulfilled.
First of all know that insurance is not an investment. It is unnecessary for you to take out an insurance policy for tax savings. Because there is no profit in it. Choose a good policy for your insurance.