Term insurance is one of the purest and simplest types of life insurance. It provides higher coverage at a very low premium. Also, it is the cheapest insurance type among all types. It ensures financial support to your family in case an unfortunate incident happens to you.
- You pay a fixed regular premium for a specific period of time, and if something happens to you during that term, your nominee will receive the sum assured amount.
- If you survive till the term, no maturity benefit will be payable to you. It only provides coverage, and no saving element is involved with it.
In simple words, it’s an insurance for your income and not for you.
Why is term insurance important?
- It provides financial security for your family in your absence.
- It covers your loan and liabilities, and the burden of loans doesn’t shift to your family after you.
- Term insurance acts as an income replacement for your family after your death.
- Also provides Income Tax rebate under section (80C)
When to buy term insurance?
1. Before Taking a Loan
Be it is a home loan, car loan, or personal loan, you should first buy term insurance before taking on any financial liability.
This ensures your family will not have to repay the loan in your absence.
2. Having Financial Dependents
If your family is solely dependent on your income (such as your parents, spouse, or children), then term insurance becomes mandatory. It provides financial protection and helps maintain a good lifestyle.
3. In Your Early 20s
Buying term insurance at a younger age is highly recommended.
Benefits
- Lower premium
- Better health = easy approval
- Long-term coverage
4. As Soon as You Start Earning
- The moment you start earning, your priority should be buying a term plan first.
- Your income is your biggest asset, and term insurance helps protect your family’s future from the beginning.
Modes of premium payment
Majorly, there are four types of premium payment modes:
- Monthly
- Quarterly
- Half-yearly
- Yearly
But most of the companies offer term insurance premiums payment in only two modes, which are Half-yearly and yearly.
