If you can avoid it, you surely would not like your family members to go through any financial stress, right? However grim it may sound to you, it is important that you start planning for the future of your family when you are no longer around to fend for them. This is specifically true if your parents, spouse, children, and other members are dependent on you financially. Regardless of whether you are the sole breadwinner of your family or not, it is recommended that you make term life insurance an important part of your plans. Even though you may go through a bit of discomfort while thinking about and planning the financial after-effects of your death, it will surely pay to think ahead of time.

Through this article, we aim to help you understand how a term plan works, whether it pays in full or not, and how important it is to invest in a life insurance plan at the earliest.

What is a Term Plan?

Term insurance refers to the simplest and arguably, the most affordable type of life insurance plan found in India. Along with providing policy holders an enhanced peace of mind, a term policy ensures that family members are financially secure and independent in the event of the policy holder's untimely death. Say, you are the policyerholder of a term cover, then you have to keep paying a pre-defined amount of money as premium at fixed intervals, across the entire term of the life insurance plan. In case of your unfortunate demise, the nominees mentioned in your term policy will become eligible to receive the ‘sum assured’ as declared during the time of purchase of the policy.

A term insurance, remains active for only a specified period of time. This time duration is referred to as the term of the life insurance plan. It is very easy to understand the features and functionality of term insurance These days, there are many different kinds of riders available that add to the protection of a life insurance plan and a term insurance is no different. If you so desire, you can opt for smartly-designed term insurance policies that offer additional coverage via benefits and riders like Accidental Death Cover and Critical Illness Cover.

If you are still confused with the plethora of term coverage products available in India and would like to compare only the best ones, then it is recommended that you log onto online insurance broker sites like Coverfox at the earliest. Along with an online premium calculator and other modes for comparing different life insurance products, these websites also help you buy term insurance of your preference through secure online payment channels.

What is the Working Style of a Term Life Insurance Plan?

Once you have purchased the term life insurance of your choice, the insurance company undertakes the payment of a fixed sum to your survivors, only if you pass away while the policy is in its active state. In other words, the full amount of the ‘sum assured’ becomes payable to the nominee, provided you cease to exist within the term of the life insurance plan in your name. In exchange for this assurance of full payment, you are expected to pay your premiums in time across the entire duration of the term policy in question.

It is a good idea to keep the following pointers in mind as you go about the purchase of a new term insurance policy or keep paying premiums periodically:

• It may not be possible to alter the sum assured amount within the term of a life insurance plan. However, if you believe that the final maturity amount will no longer be enough to take care of your family members after your death, then you may invest in additional cover by buying a new term plan or use the enhanced coverage options, if provided.

The calculations of the rate applicable to your life insurance plan relates majorly to your life expectancy. This the reason why experts recommend quick purchase of the best life insurance cover. If you buy a term policy while you are still young, you will have to pay a lower premium amount than what you will have to pay otherwise.  

 In case you manage to outlive the policy term, the insurance cover will terminate and you will not get any returns. In such a scenario, you will have to invest in a brand new term plan to gain the many advantages of life protection cover. However, it is important to note that the premium payable for getting the same sum assured after a specific period of time will be higher as you have turned older. Your advanced age and changing health conditions will add up to make the term plan much more expensive than before. It is highly recommended that you plan beforehand to cut down on your overall costs of insurance. Choose a long enough duration of your term plan so that it covers your life expectancy and your family receive the full amount as paid for by you. 

  What is Covered by Term Insurance? 

There is no particular or assigned use of the amount of death benefit that you have agreed to pay for at the beginning of the term. In general, the amount received by your loved ones can be used for covering funeral expenses, mortgages, debts, etc. In addition, the amount so received after your death can come in handy for replacing the lost income of the insured, or you. If you select your beneficiaries with care, you can rest assured that the amount coming to them will be put to good use and for the benefit of all. You may want to choose more than one nominee so that the sum assured is split between the beneficiaries just as you desire. In case you are not sure about how the death benefits will be utilized after you’re not around, you may specify the application of funds in your will with regards to paying off any specific mortgage, taking care of the college fees of your kids, etc.

Choose the Best Term Plan

There is no dearth of life insurance products to choose from in India. Just assess your income flow and future monetary needs to assess which plan is best for you. Once done, you will find it easy to lock your purchase on the right term insurance policy at the earliest!