Monday 18 July 2016

The benefits of longer life cover in a term plan

Insurance plan is an important factor while planning for the future. It ensures that under all circumstances your family continues to maintain their lifestyle and meet their dreams as well as aspirations. It is essential to ensure that loved ones are provided for incase an unfortunate event of death occurs to you.
Term insurance plan is the purest form of life insurance. They are cheaper and are available online at your convenience. A term plan fulfills the need of security. It provides the policyholder with an opportunity to select a specific period for policy tenure. The sole purpose of a term plan is protection and hence, term plans only provide death benefit.
This means if an unfortunate event of death occurs during your policy term then the life insurer will pay a tax-free lump sum amount to your loved ones (Nominee) which will help your family members meet their needs without any significant financial hardship.
A term insurance plan could pay off a mortgage or help in your kid’s education in your absence, ensuring financial security for years to come.
One of the prime compensations of term insurance protection is its lower initial cost in comparison to long lasting insurance plan. With this insurance plan, you’re generally just paying for the risk cover provided by the insurer, you pay an annual premium of few thousands and your beneficiary will receive a lumpsum amount which is way higher than what you pay. For example, if you pay Rs 5000 as a premium for a policy term of 30 years and a sum assured of Rs 1 crore. If you calculate the total amount of premium you pay is only Rs 1,50,000 for 30 years but the life cover you get is Rs 1 Crore.
Term insurance protection is often an ideal choice for people in their family-formation years because they are cheaper and it allows them to buy high levels of protection when the need for protection is often greatest.
So life insurance is a financial tool that will assist you in meeting your overall need of protection. As with a lot of financial questions, there is no right or wrong answer. Term life insurance is typically the best option in most circumstances. Term online insurance is absolutely the right product for anyone with dependents, responsibilities and liabilities. The premium amount you pay is directly linked to your age and hence, it’s better to buy a term plan when you are younger. Keep in mind that if you are healthy enough to qualify for a competitive premium, then your life expectancy will be longer than the term period. Therefore, you should consider a term plan that provides a longer life cover. Also, in the last decade, life expectancy has increased to 8 to 10 years. So if you have taken a term insurance plan till the age of 60 or 70 it may not serve the purpose and the premium you were paying for all these years will not reap its benefits.
It is recommended that you take a longer life cover up to the age of 80. Also, if you realize that you need to extend your life cover later in life, it is possible that you may not get your policy issued due to health issues which may occur later in life and even if it gets issued it will be really expensive because obviously your age will increase.

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