Inflation is on a consistent rise and comes with the fear of facing a severe financial crunch in the long run. Especially those families with sole breadwinners are more prone to bear the brunt of it. Situations can worsen if the sole breadwinner experiences an untimely demise, leaving the entire family worried about their financial liabilities. During this time, term insurance policy can come as a rescue.
Term insurance policy is one of the oldest and purest forms of life insurance that allows the policyholder to gather savings. This can help secure their family’s financial future even when they are not around. So, in case of the policyholder’s untimely death, their family can still continue to receive financial protection without facing any obstacles. Let us understand this plan better as we read.
Term Insurance Plan Explained!
Term insurance policy provides cover in the form of compensation for the policyholder’s untimely demise. This is provided to the policyholder’s family, who they may have chosen to protect financially.
For this purpose, the policyholder has to pay a cost-effective premium rate during their lifetime and duration of the tenure. Once they pass away due to any unforeseen circumstance, this premium will help their nominees use a high insurance cover to protect their financial interests and requirements.
The term plan is most well-known for its affordability and flexibility. This is because it helps the policyholder to pay premiums at their convenience, either monthly or annually. The premium paid is also quite cost-effective compared to most other types of insurance plans. Thus, your entire mortality risk is covered via the premiums paid.
The term plan is a contract that is signed as an agreement between two parties. One is you (the policyholder), and the other is your policy provider. Before you sign the contract and purchase the plan, your policy provider will offer you all the necessary details about the policy. You may also ask them any questions in relation to the same. They will help you resolve your queries on time and with utmost ease. Eventually, you can opt for a plan and a premium that is most suitable for you.
How Does The Term Insurance Policy Work?
1. Discussing The Legal Agreement
As stated above, this plan is a legal agreement binding you as the policyholder and your policy provider representing the insurance company you are buying from. You are responsible for paying for the cover that will secure your family’s financial future in case of your untimely demise. On the other hand, your policy provider will take care that this is done with the utmost ease and convenience for your family in your absence.
Once the legal agreement has been signed, you have to pay the policy provider a premium rate for the cover. This is decided based on many essential factors. So, make sure you gather sufficient details regarding the same.
2. Filling The Form Of Policy Proposal
Before you purchase the plan, your policy provider will present you with a form. This is the form that requires you to fill up all your personal details. Once this is done, it becomes easier to purchase the plan. The information includes-
- Medical history
- Age
- Persisting illnesses
- Hobbies
- Income
- Lifestyle habits
- Professional nature
Once these details are provided, the provider can help you to understand the likelihood of your family raising a claim for the plan. But remember that certain factors can lead to higher premiums. This may include-
- Any unhealthy lifestyle habit, mainly drinking and smoking
- Chronic health concerns
- Risk-prone hobbies that may lead to accidental death
- Any dangerous profession
3. Your Requirements Are Considered
The plan also considers your needs and requirements for a convenient experience. This includes-
- Deciding upon the cover
- Selecting the option of premium payment
- Any riders or add-ons to include
- Choosing the policy term
4. Assigning A Nominee
In the final step, you need to assign a nominee who can enjoy the financial covers in case you are no more. It is important to choose a reliable nominee who can use it well.
The Bottom Line
Term insurance policy is very simple. It is also an efficient and reliable plan to consider when you want to secure your family’s financial future in case of your death due to an unforeseen circumstance. Purchase it now for the safest experience.