Why is Term Insurance known as a Pure Risk Protection Plan?
Updated On Aug 04, 2021
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The struggle against COVID-19 over the last year has shown us that investing in long-term plans is the best way to ensure family stability in such a situation. Furthermore, having the proper insurance coverage in place can help policyholders protect their families in an unfortunate event, as it is the primary goal of a term insurance policy. Hence, term policies can be the most outstanding solution for policyholders who are concerned about their families and loved ones. You can continue reading to learn more about a term insurance plan's pure risk protection feature.
What is a Pure Risk Protection Insurance Plan?
In the case of the life assured's premature death, pure risk insurance provides a financial safety net. The insurance company pays the sum assured to the beneficiary named in the policy if the life assured dies during the policy's tenure. Though if the life assured survives the insurance period, there are no maturity benefits. Pure death risk protection plans also include term insurance policies that support the life assured's loved ones in remaining financially stable in the event of the life assured's untimely demise.
Why is Term Insurance Called as a Pure Risk Protection Policy?
The following are some of the reasons why a term insurance policy is known as the pure risk protection plan.
Affordable Premium Rate
Term insurance policies are less expensive than most life insurance plans in the market. Even those with limited savings and earnings can purchase them since a term insurance plan provides a pure risk cover with no investment options. Only the life insured's untimely death is covered. As a result, premiums are solely calculated to account for mortality expenses. The life insurance company will only pay the nominee if the life assured dies within the policy period. This explains why premiums are so low.
Adequate Sum Assured
If you have more liabilities and are willing to pay a higher premium, you may want to get a more extensive sum assured. With this approach, you can be sure that your family would be financially secure if you pass away within the insurance duration. Since your family will be left with a significant corpus fund in such a case, there will be no more dependency or fighting to make ends meet. Covering monthly household bills, a child's education, marriage, and other expenses might be difficult otherwise.
A term insurance policy can be pretty helpful in providing a financial safety net for your family. As a result, it is crucial to analyse various plans and carefully select the appropriate policy. Furthermore, online term insurance plans can be bought at lesser prices. So don't wait any longer to get a plan, because difficulties are not accompanied by warnings.
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.