We live in a fast world, from our eating routine to travel schedules we are dependent on technology. But, we often neglect our safety and wellbeing along with our near and dear ones. To balance the speed of life and safety of an individual insurance plan is the correct answer!
Insurance plan is a standard form of contract in between the insurer company and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.
There are various parts of an insurance contract such as a declaration, definitions of various terms, exclusions, terms and conditions and etc. There are various life insurance plans that are available in the market. But, a common man tries to avoid insurance policies because of reasons like high premium amount, complicated paperwork and etc.
Life Insurance is a very simple contract which is signed in between an individual and an insurance provider, wherein the insurance provider guarantees to pay a certain sum of money or the sum assured in case of the death of an insured individual. In order to avail this protection, the insured pays a certain amount of premium towards maintaining the policy.
Life insurance is a safety net that is weaved in order to offer a financial security and protection to the policyholder against any loss of life. While the primary purpose of a life insurance policy is to protect the financial interests of the family of the policyholder. While one is looking for a life insurance, there are three basic aspects that are primarily related to life insurance, and they are as follows:
- Premium amount: An insurance premium is the amount of money that an individual or business must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned, and also represents a liability in that the insurer must provide coverage for claims being made against the policy.
- Death Benefit/Sum Assured: This is the money which the insurer assures to pay to the nominee or the policy beneficiary of the policyholder after his/her demise. Death benefit varies based on a number of parameters.
- Term: An insurance policy provides protection only for a certain period of time. This is called the term. It is very crucial for the life insurance policy, and it could vary based on the type of policy chose.
Term Insurance provides a life insurance facility that is provided by most of the insurance company as a financial coverage but for the specific time period only. The policyholder is covered from mishaps like death during the specific time of the policy term. These can be considered as the simplest insurance plans available. Term insurance covers the policyholder for a fixed period of time. For the Term Insurance there is no cash value and as a result, the plan is less expensive than the other regular life insurance policies. In case of the uncertain and untimely death of the policyholder, a term insurance plan is a savage and offers a financial protection to the family of the policyholder. There are various benefit that a policyholder enjoy under the term insurance policy, such as-
- Affordable Premium Option
Term Insurance policy premium offer the customer’s lowest premium payment options. Premium can be paid in a single payment or regular plans in which premium can be paid either monthly, quarterly or annually.
- Add – on benefits
There are many benefits that are not covered by the Term Insurance plans for the individual. Insurance companies understand the need for the policyholder and they provide various add-on plans as per the need of the customer
- Tax savings
The premium amounts paid for the Term Insurance plan in which payouts are made in the case of death are tax-free.
The cash value that is built through the premiums in life insurance plans can be utilised to receive loans at low interest rates. Insurance life plans act as both savings and protection plans while term insurance is a pure life insurance plan with no additional benefits but death benefits and low premium benefit. Someone who is as young as 25 years should opt for a term plan and convert it into a whole life insurance to save on the premiums in the early years of life. But a person aged 40 years or above should consider buying a permanent life insurance. So, one can choose a life insurance plan or a term insurance plan as per his/her convenience and requirement of time.
Views expressed in this article are personal opinion of Naval Goel, CEO & Founder of PolicyX.com.