3 key points to keep in mind while opting for a term insurance plan

What is term insurance?

Term insurance can play an essential part in your financial planning system. It is a protection plan and an income replacement for your family members. Since it can offer a financial payout to your loved ones after your demise, they can maintain their standard of living. Although a term policy can be the simplest form of an insurance product, you might be unaware of how to make the right selection at the time of purchase. Therefore, let’s go through the top three key points you should keep in mind while opting for a term plan to make informed decisions during purchase:

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1. Coverage

The primary objective of term insurance plans can be to offer financial protection to your loved ones. Since it aims to safeguard the future of your loved ones financially, a term policy can provide a sum assured value or life coverage to them in your absence. The cover can be an income replacement to ensure your loved one’s financial well-being after your demise. As the nominees, your family can receive the coverage as a monthly income or a lump-sum payout.

Before selecting the term coverage amount, consider your family’s financial requirements. Evaluate their current expenses, such as utility bills, EMI payments, rent, and so forth, and future expenses, such as your child’s education, dream wedding, and so on. After assessing all their financial goals and requirements, choose the coverage amount wisely.

2. Premium

The premium can be an essential element of a term policy. Since you receive financial coverage from your insurer, you should pay the premium regularly. Paying the premium on time can allow you to reap the term insurance benefits. However, there can be times when you might be unable to pay the premium amount due to loss of income, critical illness, physical disability, and so on. Under such a scenario, your insurer can provide 30 days grace period to repay the amount. Your term policy can lapse if you cannot pay the premium within the grace period.

Many insurance companies can give you the flexibility to choose the premium payment mode. Typically, you can select an excellent payment frequency between quarterly, monthly, half-yearly, or annually. Before opting for a superior payment mode, use a term insurance premium calculator to determine the premium value. Identifying the premium amount beforehand can help you understand whether you can afford the premium or not.

3. Tenure

Tenure of the term policy can be as essential as choosing the right coverage amount. Term coverage can be for a specific duration. Typically, the assignment of the term policy can be 15,20,25,30 years.

If you wish to reap the term insurance benefits, you should buy term insurance at a young age. When you are young, purchasing a term policy can let you offer your family financial protection for longer. Therefore, buy term insurance after you receive your first paycheck.

In a nutshell, term insurance can provide financial protection against untimely death and unfortunate events, such as loss of income, physical disability, critical illness, etc. Therefore, choose the right term plan based on the abovementioned parameters and your financial goals. In addition to this, you can consider other key pointers, such as your age, current health condition, income, and so forth.

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I work for WideInfo and I love writing on my blog every day with huge new information to help my readers. Fashion is my hobby and eating food is my life. Social Media is my blood to connect my family and friends.
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