Term insurance plans are the most basic but most effective insurance plans for everyone. Investing in term plans is recommended by experts as well as those who have benefitted from those plans. Term insurance is the most affordable life insurance because it offers higher coverage for low premiums.
The motive of term insurance plans is to ensure that the financial future of the policyholder’s loved ones is secured if anything happens to them during the policy’s term. However, there must be several questions about term plans that may be bothering you, some of which are answered below.
#1 How to buy the right term insurance plan?
The ideal pan is a relative subject. It depends on the policyholder’s requirements. A fact-finding course of action is needed to assess your future and financial requirement, which will define what the right plan would mean for you. However, you should consider these things before buying one –
- Term – The tenure should be kept long. Go for a plan that provides the highest term if you are buying the plan early in life.
- Sum assured – You must aim for the highest coverage on the basis of your financial worth. The analysis of your human life value or the requirement of the coverage based on future expenses and income should be done to decipher the required coverage you need.
- Buy online – If you wish to save money, you can buy the policy online. This is possible because the involvement of middlemen is eliminated. This is why online term insurance policies are cheaper, faster, and easy to buy. You can even choose amongst other plans offered by various insurance companies easily.
#2 Is buying a plan online secure?
Yes, doing so is secure. All the insurance companies are selling policies online because the procedure is easier, fast, and saves money. However, before buying one, you should ensure that the website is authentic.
#3 What are the different kinds of term insurance plans?
There are four varieties of term insurance plans –
- Level term plan – Here, the sum assures remains the same through the term and is pain upon the policyholder’s death.
- Increasing term plan – The sum assured increases yearly during the term but the premium remains the same.
- Return of premium plan – Under this kind of plan, along with the maturity benefit, premiums paid will also be returned if the plan matures.
- Decreasing term plan – Here, the sum assured reduces and such plans are also known as mortgage redemption plans.
#4 What if I stop paying premiums?
If you do not pay premiums even after the grace period, the policy lapses. As a result, the sum assured gets adjusted according to the decrease in premium amount. However, paying the premium on time always is advised.
#5 Would I receive income tax benefits?
Yes, you get income tax deductions u/s 80C on the IT Act against payment of premiums for term insurance plans.
The Bottom Line
The above-mentioned questions are generally asked by those who wish to invest in term policies and are gaining knowledge before committing to the policy.