There is no such thing as certainty in life and quite often, our most well-thought plans can fail. However, one thing that is certain in life is death. Therefore, it is necessary to make plans to secure the future of your family in the event of your passing. In this context, one of the easiest ways to achieve the above objective is buying a term plan.
What is a Term Insurance Policy?
A term insurance policy is a contract between an insurance company and a policyholder under which the former agrees to pay the nominee of the policyholder an assured sum in the event of their death before the expiration of the policy’s term. The insurance provider charges a premium amount from the policyholder as a consideration for the provision of the above service. The term plan you choose has to be aligned to various personal factors, such as age, number of dependents, your lifestyle, income and financial obligations for your family.
You can purchase a term life policy online by following a few easy steps. Firstly, you have to select an insurance company and visit their website. Secondly, you must choose a term plan that suits your financial goals and budget. Thirdly, you must add the features you want to include in the term plan and proceed with the purchase of the plan.
Tata AIA Life Insurance Company offers a range of term life insurance coverage options to suit varied needs. You can purchase a TATA AIA term insurance policy after computing the premium amount on the online premium calculator available on our website.
Not-so-Popular Benefits of a Term Insurance Plan
You may be aware of the many benefits of a term insurance policy, including financial protection for one's family, tax* relief, low premium for a high insurance cover, and the option to include add-on features. However, in addition to the aforementioned popular benefits of a term life policy, there are several other advantages of a term plan that are relatively lesser known.
Some of the lesser known benefits of a term insurance plan are as follows.
The option to pay the premium for a limited term
Investing in a term insurance policy provides you the option to select the period during which you want to pay the policy premium. Therefore, you can select to pay the premium till the age of 40, 50, or 60 and enjoy a lower burden on your finances in the latter stages of your life.
It is important to note that the sooner you start your investment in a term plan, the higher the flexibility of the period to make the premium payments is. Hence it is advisable to buy a term plan at an early age so that you do not have to bear the financial strain of paying insurance premiums post-retirement.
The flexibility to choose the mode and frequency of the death benefit payout
A term life policy also offers you the opportunity to select the mode and frequency of the payout of the death benefit to your nominee. Although the aforementioned payment is usually made in a lump sum mode, you can opt for monthly payments to ensure a regular stream of income for your loved ones. People who are the sole breadwinners of their respective households often opt for the aforementioned mode of payout to ensure constant financial support for their families.
Furthermore, you can choose from two types of monthly income plans which have been listed below.
Fixed monthly income plan
Increasing monthly income plan
The opportunity to increase your life cover as your earnings grow
As you advance in your professional life, your financial capabilities get enhanced. Furthermore, your financial goals may also change with the passing of time. Therefore, most term plans have the option of enhancement of the life cover at a subsequent stage in the policy tenure. This feature enables you to increase your life cover and add more add-on benefits to your term insurance policy, thereby making it more comprehensive.
It is common for people to start with a basic term plan and keep making modifications to it as their financial strength increases. Furthermore, if you happen to develop a medical condition after buying a term plan, you must enhance your life cover to include a cover for said condition. It is important to inform your insurance provider about any medical condition or illness and failure to do so may lead to your term life insurance policy being nullified and your insurance claim being rejected.
Substantial benefit at a low cost and risk
By purchasing a term insurance plan, you select an investment avenue that carries low risk as well as low cost. Although the 'no return of premium if the policyholder survives the term life policy tenure' clause is considered a limitation of a term plan, there is a way to ensure return of premium on term plan. You can add a 'return on premium2' feature to your term plan. This feature is one of the hidden facts of term insurance.
The feature to avail waiver of the premium obligation
Another term life insurance fact that is not popularly known is that you can choose to be free of your obligation to pay the policy premium in case you have a critical illness. However, you can opt for the aforementioned waiver of premium only if you have added said add-on feature in your term life policy.
There are many benefits of buying a term insurance policy, some of which are less widely known than others. Therefore, you must conduct thorough research before purchasing a term plan and ensure that it provides adequate financial security to yourself and your family.