What is Term Life Insurance?
Term life insurance is a straightforward and affordable way to provide financial protection for your loved ones. It offers coverage for a specific period, typically ranging from 10 to 30 years, and pays out a death benefit if the insured passes away during this term. This type of policy is designed to offer temporary coverage, often matching the length of time a person might need protection, such as until children are grown or a mortgage is paid off.
One of the main advantages of term life insurance is its cost-effectiveness. Because it only provides coverage for a set period and does not build cash value, premiums are generally lower compared to permanent life insurance policies. This makes it a popular choice for people looking to ensure their family’s financial stability without a significant financial commitment.
Term life insurance policies come in various forms, including level term, where the death benefit and premiums remain the same throughout the term, and decreasing term, where the death benefit decreases over time, usually in alignment with decreasing financial obligations like a mortgage.
Key Features
Sum Assured (SA)
The sum assured should ideally be 10 times your annual income to secure
your family's financial future. For example, with an annual income of 20 Lakhs, a sum
assured of 2 Crores can help maintain the same standard of living for 10 years.
Policy Term (PT)
The policy term can be selected based on your specific needs, typically
lasting until retirement (age 60) or even up to age 100 for legacy planning. Coverage is
guaranteed from the day the policy starts.
Premium Payment Term (PPT)
Choose how many years you'd like to pay premiums. Options include paying throughout the
term or opting for a shorter period like 5, 10, or 12 years. Shorter terms have higher
premiums but free you from payment obligations sooner.
Additional Benefits
Return of Premium
Some policies offer a return of premiums if no claim is made during the term. For instance, if you pay a premium of 40,000/year for 10 years, you can get back 4 Lakhs minus taxes and expenses.
Riders
Enhance your policy with riders for critical illness, accidental death, and more. For example, an accidental death rider could pay out an additional sum if the insured passes away in an accident.
