Tuesday, 24 February 2015

Term Insurance-Facilitator Of Complete Protection

You must have heard about several term insurance policies in India. However, there still exists a fair amount of negligence in terms of its prominence.The rationale of this article is to make our readers aware about a term insurance policy’s importance. After you read this article, you will understand that why you should get term insurance. Also you’ll be able to get an appropriate plan suiting your requirements.

  Before buying a term insurance cover, determine the coverage you will need
This is a necessary aspect as it is the sum assured amount which will determine the usefulness of your insurance when needed. Hence it should be decided rationally considering all the possible aspects. Below is a simple thumb rule to follow-
·        An individual below 45 years of age must select an insurance guaranteeing 10 times the value of the individual’s annual income.
·        The person above the age of 45 must opt for an insurance which gives 5 times the value of his annual income.
 Basic details of term insurance
·        Term insurance being pure insurance plan, there’s no surrender value or paid up value. Also one can’t apply for a loan in parallel to term insurance plans.
·        Insurer decides the premium based on one’s gender and age followed by his health and lifestyle habits. Older person will have to pay higher premium than younger counterparts.
·        Women usually have to pay lesser premium than men of the same age due to female life expectancy levels being usually higher than male life expectancy levels.
·        The premium rises with rising policy duration as, the person’s possibility of facing higher risk increases with his age.
·        People who smoke are charged with higher premiums than those who don’t smoke.
·        People who have obesity problems or other ailments require require paying greater or higher premiums.
·        Certain companies may not demand medical checks. However, certain insurance companies before providing term plans, require the buyers above 35 years to undergo medical tests.
 Aim for the maximum coverage value-
The latest IRDA rules grant support for higher protection component prevailing amongst term insurance plans in India. It’s seen a minimum of 7-10 times increase in the provided sum insured value. However, it also depends on the insured’s age.Many consider it as a welcome move for the fact that it emphasizes on the protection aspect of the policy and not an option for pure savings or investment per se.There’s another variation of this which is known as Term plan with Premium Back. The idea is that if the policyholder survives throughout the policy term, he/she should at least get his total premium amount. Therefore, they are preferred by most in India.

 Term insurance also gives posthumous benefits
One can get term plan for his credit protection. For instance, consider a person dies before paying off his home loan; however he had a term insurance. This term insurance will take care of the mortgage loans thus preventing the family from facing the burden.Hence, now you know the factors which need due attention while deciding on a term plan. Choose wisely and take help of professional when needed. 

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