Death of a person brings about an emotional loss to the family. If this person is the breadwinner, the family also suffers from financial loss. This could be disastrous incase nothing has been left behind for the survivors of the deceased.
Insurance helps to cover this eventuality by providing monetary benefits to the family of the policyholder in his absence. Though there are various insurance plans offered by insurance companies to cover this eventuality, the most cost effective plan is that of Term Insurance.
Term insurance is a pure risk cover insurance plan in which a sum assured is payable on death of the life assured (provided the policy is in force). However, if the policyholder survives till maturity, no benefits are payable at the end of the term. The Insurance Company may undertake to return a part of the premiums collected at the end of the term (in case of survival).
The advantage of term insurance over other plans is that the premium for this policy is negligible compared to others. Secondly, the premiums payable need not be for the whole term of the policy. Not only that, some riders in the form of value additions could also be attached to the policy. These value additions could provide the policyholder with an additional sum assured in case of critical illness or an accidental death. The policyholder can also opt for accelerated sum assured in case of critical illness in which case his policy will cease.
Because the term insurance is very cheap, it can be used to –
- Cover the human life value
- To pay the liabilities in case of death
- Insure elderly members of the family.
- Critical illness cover and accidental cover.
As the premium paying period in case of term insurance is usually less than the period of the policy, the policyholder can expect to be covered 5 to 10 years after he stops paying the premium.
In case if a person wants to insure himself for a higher amount but lacks the capacity to pay the premiums thereof, term insurance is the best alternative. It is also recommended for people who have some liability in the form of say a housing loan. In the latter case, the insurance company will take care of the outstanding liability.
So if you are looking for a pure life cover, which is affordable, pays if a critical illness afflicts you and also takes care of your liabilities in case any eventuality occurs, term insurance is the product you should be opting for.
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