There are some events in life that no one has any control over. And, Life Insurance products are meant to sail through such difficult times. Securing the financial future of your family members, life coverage plans help them fund children’s education or construction of home and clearing debts in your absence. Notably, life coverage plans offer death benefits to family members immediately after something unfortunate happens to the policyholder. Read ahead to learn about Term Insurance and why it is better than life insurance options.
What is Life Insurance?
With an objective to provide financial security, Life Insurance is a financial tool that plays a vital role in financial planning. Such plans offer comprehensive and extensive coverage to the policyholder and his/her family members. These plans come with a dual benefit of life cover and a savings component.
Notably, the premiums of life coverage plans are divided into two categories: one part is allocated towards providing death benefits to nominees and the other one is reserved as the investment and saving component. Unit-linked insurance plans or ULIPs are the classic example of this arrangement.
Besides financial security and death benefits, Life Insurance policies come with the advantage of wealth creation and tax savings. There are some policies that also offer retirement plans that help you and your spouse receive regular pension for life.
What is Term Insurance?
Term Insurance, one of the simplest life insurance products, provides compensation to family members only upon the demise of the life insured. With no saving component and survival benefits, these plans are only designed to offer death benefits.
They are known to provide substantial coverage at low premium prices. By paying just a few thousand rupees, you can get a high sum assured amount.
These days, you can enhance the scope of coverage by buying optional riders, including critical illness cover and accidental death benefit.
When talking about the benefits of buying term plans, their cost-effectiveness, higher and longer life coverage, and return of premium option cannot be ignored.
One must always buy Term Insurance plans online from reputable insurance providers like ACKO in order to avail the benefit of comparing the premium quotes within minutes. This helps in buying much cheaper plans offering higher coverage.
Term Insurance Vs Life Insurance
When discussing the advantages of Term Insurance over other Life Insurance, consider the following:
● Premium Cost: Terms plans offer high sum assured coverage with low premium rates. But, one can reap the death and guaranteed maturity benefits of life coverage plans only by paying high premium rates.
● Flexibility: Term Insurance plans come with the flexibility of adding riders in order to enhance the scope of coverage. On the other hand, Life Insurance plans do not have any option of add-ons.
● Surrendering the Policy: It is easy to surrender a term plan. Once you stop paying premiums or the death benefit is paid to the nominee, the policy lapses. With life coverage plans, it is vital to complete the policy term to avail maturity benefits.
● Renewability: Term Insurance is renewable. Also, these plans can be converted into an endowment plan (a Life Insurance policy that agrees to pay a lump sum on the death of the policyholder or after a specific period of time). But, the option to renew a life coverage plan is only available upon maturity.
Conclusion
While Life Insurance plans come with the benefit of assured maturity benefits, lifetime coverage, and flexible premium payment options, Term Insurance policies offer basic life cover providing only death benefits at an affordable premium. In order to decide which plan best suits your needs and requirements, consider your financial goals. For any insurance assistance, reach out to ACKO.
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