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Life insurance is the only complete solution for future financial security. It is comprehensive, cost-effective and extremely flexible. People have become extremely selective concerning financial products in the recent past. The level of knowledge they have acquired assists them to pick the right solution for their specific demands. Insurers have introduced various comprehensive insurance policies for multiple benefits such as savings and insurance, and life cover.
However, if you need an exclusive product for an exact and complete life cover, term insurance is the ideal resolution as it offers pure insurance benefits. What is a pure insurance term plan? How diverse, different and beneficial it is? Let us try to understand it here.
Term insurance is the purest life insurance plan. It is a contract between you and the life insurance company against a life cover. The insurer ensures to pay a sum assured to the nominee if you meet with an unexpected demise during the policy term. It will help your family reduce the financial burden associated with your death, such as managing daily expenses and planning long-term financial commitments.
The term policy also provides flexible features. You can pay the premium amount monthly, quarterly, half-yearly or yearly based on your steady flow income. Before you decide on the sum assured, make a financial plan based on your income and financial goals to arrive a the right amount.
A term insurance plan is called a pure insurance plan because the sole purpose is to provide a maximum death benefit. It offers a high sum assured for an affordable premium.
The difference between a pure insurance term policy and the other life insurance plans is that it does not offer a maturity benefit. On the other hand, endowment plans such as the ULIP and the guaranteed1 return insurance plans provide investment and savings benefits and life cover.
Low premium term insurance – As the primary and the only motive of a term policy is the death benefit, it is available at a low cost. However, with other endowment plans, as the features of savings and investment options are provided, the costs increase, which lead to a higher price. You can get the pure term insurance plan even at a cheaper rate if you purchase it at a younger age.
The sum assured and the premium amount is calculated based on the probability of death risk. The medical condition is adequately stable when you are young, and no pre-existing ailments increase the possibility of death. Hence, the premium amount is extremely low for a long policy term aiming for a high sum assured.
Other life insurance policies are slightly costlier due to the features and benefits offered. For example, in a ULIP plan, one portion of the premium amount is invested in financial markets for market-linked returns. In addition, the insurer incurs additional cost due to managing the fund and administering the policy. However, it is not advisable to say that these policies do not serve the purpose or are extremely high in price. On the contrary, these policies are designated towards specific life goals and are definitely worth the investment.
Also, the premium amounts from term insurance plans are collected and pooled for the designated purpose of paying the death claims only. As the overall risk on claiming the life insurance benefit is low, the premium amount is affordable and low for a high sum assured.
Though the primary focus of a pure insurance plan is to provide a death benefit with a high sum assured, the policyholder can further enhance the plan with add–on rider# options. For example, the critical illness rider# will make the insured amount payable for your medical expenses if you get diagnosed with a critical illness during the policy term.
The term policy with return of premium rider# can even provide a complete refund of the premium amount paid as a maturity benefit if opted for and survive the policy term.
The waiver of premium rider# can waive off future premium payments and confirm the insured amount payable if you get totally or permanently disabled due to an accident and that you cannot make the future payments.
Financial instruments are extremely beneficial and cost-effective when used for the right purpose. Considering the features of a pure insurance plan, it is best suitable for you:
if you have a family dependent on your income at different stages in life for their short term and long-term financial requirements.
If you are looking at a diversified portfolio with specific products for definite financial goals.
If you have a lot of debts in the form of housing loan, education loan etc.,
TATA AIA term plan online provides different options with various flexible features. The customer support team can devise an investment strategy based on the financial status.
Insurance products are varied in features and benefits. However, if providing a life cover and ensuring the family’s financial security is the primary motive, a term policy is the best solution among the pure life insurance plans. It can surely cost-effectively cater to your needs. Purchasing the term insurance at the right time will ensure complete protection. If you are the sole earning member in the family, a pure insurance policy is an ultimate requirement. Purchase pure insurance early in life, stay invested and accrue extreme benefits!
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Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services, and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication; however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
#Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
IN THIS POLICY, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
Past performance is not indicative of future performance.
All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
Please make your own independent decision after consulting your financial or other professional advisors.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry