In this world where there is no guarantee of anyone’s life, risk involved in every work and high prices for the treatments the first thought that comes in mind is to get insured yourself and your family as quickly as possible. As precaution is better than cure, so why to wait for something to happen. You can insure your life by acquiring any of the several life insurance products.
The presence of numerous insurance companies often distracts and confuses your mind to which company to opt for. There are many insurance companies like LIC, ICICIPru, Bharati AXA, various private banks, Religare Insurance, etc. which offer the life insurance schemes and programs, but none of them tells you about the term life insurance which is the actual least expensive insurance policy truly defining the meaning of insurance.
Importance of Life Insurance: Before buying a life insurance you should see whether anyone is dependent upon you or not i.e. are you the major source for income for your household? If yes, then life insurance is a must buy a policy to secure your family in the future. Suppose some miss happening falls on you and you die. In that condition how your family will survive comes first in mind. But when you buy life insurance plan the company gives you a risk coverage meaning that if anything happens to you then your family will get the risk covered amount for their survival.
Although life insurance may be of less use who depends on other but is very important for those who lead their families and their family solely depend upon them.
What is Term Insurance?
Term insurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time i.e. you need to pay a fixed amount of the yearly premium for the certain period of time defining your term of insurance. When the period gets completed, you can renew it under new rates of premium. But the amount you invested doesn’t get refunded at the end of the term. During the span of insurance, if the insured person dies due to some reason, the death benefit covered under the policy will be paid to the beneficiary.
It is the least expensive way to insure you and your family as its premium is just about Rs. 2000-Rs. 4000 per year for Rs. 10 lacs risk cover depending upon your age and term. You can have your term insurance for 5 years, 10 years or more depending on the choice and for that period you just need to pay the meager premium only.
Benefits of Term Insurance: The other traditional life insurance plans asks you for big amounts of premium while in term insurance you need to pay only two to four thousands of rupees yearly. After investing huge amount in those insurances, you get a risk cover of few lacs while in term insurance you get a huge amount of risk cover. So if you are getting better risk cover in fewer amounts then why to invest on those heavy costing insurances. Although the amount gets refunded in traditional plans but if you invest that sum of money in some other programs like fixed deposits and other schemes you can gain a lot from that.
For example: In term insurance if you get it at the age of 20-25 years then the yearly premium comes out to be approximately Rs.2500 and you get risk cover of about 10 lacs.
But in the same case if you take other insurance plans they provide 10 times risk cover on your annual premium, meaning if you invest 2500 you get only Rs. 25000 risk cover. So to get risk covers of up to 15 lacs you need to pay a premium of about 70-80 thousands.
Taking an example of 23 year old person if you take term insurance for 30 years and risk cover of 10 lacs then you have to pay premium approximately
ICICI Term Insurance: Rs. 2400/- Per Year (30 years term)
LIC Term Insurance: Rs. 2600/- Per Year (25 years term)
You can also opt for single premium option where you have to pay one time premium for the whole term.
Insurance advisers do not advice you for this term insurance because the commission which they get from term insurance is very less. They always present you other plans which generate high commissions for them but in real those plans are less useful and beneficial for you.
Term Insurance don’t Giveback
Many people don’t like term insurance because they feel it do not give any returns. If nothing happens to them, their paid premium get wasted. Do you think other insurance plan do not charge you for insurance cover they provide? If you think so then you may be wrong because there are some insurance charges on every plan. Sometimes it is not noticeable because you don’t get any detail of charges. For example if you pay Rs. 10000/= of premium in traditional insurance plan and they provide you risk cover of Rs. 1 Lakh then they may charge you about Rs. 200 -500 per year. This is not shown anywhere. So don’t think term insurance do not giveback.