What Advantage Does Your Term Insurance Plan Have Over Other Types of Insurance?

A life insurance plan has become a necessity in today's world. A comprehensive financial strategy should include a variety of life insurance products. If you want to build a significant financial buffer for your family at a low cost, a term plan is a way to go. A term plan is the purest type of insurance, and it tries to reduce a family's financial risk/loss of income in the case of a member's death by providing a lump sum or staggered payout. Read on to know about different term insurance plans' features that make them unique and different from other types of life insurance plans. 

What Advantage Does Your Term Insurance Plan Have Over Other Types of Insurance?

Here are six characteristics that distinguish term plans from other life insurance products and why you should choose one for yourself. 

• Need for Fulfilment

There are a variety of insurance plans available, each designed to meet a certain requirement of the insured individual. Endowment policies emphasise the insured party's need to save as well as maturity advantages, whereas Unit Linked Plans (ULIPs) emphasise asset growth and tax savings. A pure term cover, on the other hand, protects against the possibility of a loss of income, which can wreak havoc on a family's financial plans or debt repayment. While an endowment plan can give some post-retirement income, it won't be enough to pay off a mortgage or pay for college. Purchasing a term plan has therefore proven beneficial to your family.

• Tenure

Most endowment and money-back plans begin to supplement income after retirement (between the ages of 55 and 65). With maturity, the insurance benefit ends. Both whole life and term insurance plans are available until the age of 100, although the premium for a whole life policy is higher than that of a term policy.
Even in your later years, a term plan continues to give the same advantage, ensuring the future of children and dependents. 

Also read: What is the Best Age to Buy a Term Insurance Plan?    

• Cheaper Premium Rates

The most cost-effective insurance plan is a term policy. Most other life insurance plans can be many times more expensive than a conventional term cover, depending on the maturity benefits, bonus, and payment alternatives. A term plan, on the other hand, is quite economical, making it an excellent choice, particularly for young people.

• Affordable Coverage
  

A pure term insurance policy's coverage is unrivalled. You can choose the appropriate level of coverage based on your income potential and future responsibilities. It is difficult to obtain a high level of coverage under any life insurance plan, even term insurance. According to the thumb rule, you should have at least 10 times your yearly salary in life insurance, or enough to cover future living expenditures and the worth of financial goals after inflation. Only term plans can provide you with adequate coverage without draining your bank account.

• Flexibility

Term plans are relatively simple to obtain. In some circumstances, a simple online form and a medical test are sufficient. You can raise the coverage in the future if you choose it at the start of the policy, depending on your changing needs and ambitions. It's also simple to surrender a term policy. If a policyholder stops making payments, the insurance will lapse. When it comes to insurance plans with maturity benefits, the policyholder may only receive a portion of the benefits if the policy is cancelled. After deductions, a portion of the premium paid may be reimbursed in some instances.

Endnotes

The crucial characteristic that distinguishes a term insurance plan from other life insurance plans is its high coverage at low costs. Term plans give you the choice of having a sufficiently substantial sum assured at a reasonable cost, whilst other plans may offer guaranteed returns, periodic money backs, or lifelong annuities. This would allow you to provide comprehensive financial security for your family at a reasonable cost.

Must read: How Much Term Insurance Cover Should One Buy?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.