A Wise Man Buys A Term Insurance Plan

You know buying a life insurance is the one of the most important decisions of your life. 

Buying a life insurance not only covers your family with the insured amount but also protects your family from any kind of financial unstablity.

Everyone is going to die one day so, why not cover your life with a life insurance.

Life insurance ensures a huge amount of life coverage money compared to a smaller premium.

What is Term Insurance

Term insurance is one type of life insurance policy in which the life of a person is covered for a specific period of time (generally 60 years) with a very large amount of money against a very small amount of premium. The benefit is only in the case of death of the policyholder. If the policyholder dies within the term of the policy then the sum assured will be paid to the nominee. In case the policyholder survives, no money is payable to insured person.

The early you buy the term insurance, the lower the premium will be.

It is ideal to buy a term insurance with investing in mutual fund

In an ideal scenario, you buy Rs.1 crore term insurance plan in the age between 25-30 years and you have also invested in mutual funds with a SIP of Rs.1000 for the same period.

Assuming, the term insurance will cost you a premium of Rs.500

Your family will be paid Rs.1 crore in case of your death only.

If you survives, the insurance company keeps all the premium you have paid, then the Investment you have done in mutual fund will support you financially. 

Buying Rs.1 crore term insurance policy and investing Rs.1000 through SIP in mutual fund for 30 years eventually pays you the same amount of money.

So a wise man buys a term insurance and buys a mutual fund too

How does a Term Life Insurance work ?

If someone buys a term life insurance policy, the premium which he pays is decided based on the amount of sum covered by the insurance company.

Premium is also decided based on someone's gender, age, health condition. Sometime you might be asked for a medical examination.

The insurance company also asks for your current and previous medication, driving records, drinking and smoking status, occupation, hobbies and family history.

The insurer guarantees a very large amount of money in terms of face value of the policy. If the policyholder dies within the term period, the face value of the policy is paid in cash to the beneficiaries.

The insured amount is non taxable most of the times.

The beneficiaries uses the money in their interest.

In case of no death of the policyholder, no money is paid to the insured and the insurance company keeps all the premiums.

In some cases the term insurance policy may be further extended for a specified period of time. But the premium may get cost you higher.
A Wise Man Buys a Term Insurance Plan
Term Insurance


What is the eligibility criteria for Term Insurances

Specific eligibility criteria is considered by many insurance companies. One of them is your age must be between 18 to 65 years while it covers a maximum maturity age of 85 years. The term of the policy is between 5 years to 50 years and the sum insured can be from Rs.20 lakhs upto Rs.1 crore and even higher.

Why Do You Need Term Insurance

Term insurance is a cost-effective insurance policy. The premium you pay is very small and the life cover you get is very high.

The term insurance is very suitable for the family who are dependent on single person for the financial needs. In case of the early demise of the person the dependent can become financially stable.

Some reasons why you need term insurance are

• The term insurance policy gives you a very large amount of life coverage as compared to other life insurance. It protects you from your future financial needs.
•The insurance helps in dealing with properties loans like home loan.
•It helps in dealing with marriage expenses.

If you first buy a term insurance then buy a mutual fund. If you buy a mutual fund, you should buy a term insurance plan too.