Before entering any investment, you should have a clear understanding of all their concepts. This allows you to understand the risky and positive elements of the investment. By doing so, you can protect yourself from losses and also gain maximum returns from the investment. These steps should have more priority when the investment is for the benefit of our loved ones. Term life insurance is a similar investment whose main purpose is the well-being of the loved ones in the investor’s absence. So, if you plan to invest in the best life insurance, you must know its basic concepts. Read on to learn more about these concepts in detail.
Term Life Insurance
Term life insurance is the simplest kind of life insurance policy. It doesn’t have a moneyback policy or even higher death benefit. But when compared to other insurance policies, its ratio of death benefit amount to the invested amount is one of the highest. This high return from a limited investment helps several people protect their families, even with a little investment. As per a report in 2012, almost about 21% of the population in India is living below the poverty line. And adding it to the number of people from middle-class families who struggle to set aside savings results in a large portion of the citizens in the country. Term life insurance provides an opportunity for all these people to have life insurance at very low expenses.
Importance Of Buying Term Life Insurance
Well, there is no dispute on the question of why one should have a life insurance policy. It is because they are beneficial financial tools. But term insurance, even with a lack of a moneyback policy, is important. The main reason is the target audience of term plans. Term plans are mainly for the benefit of the people belonging to the financially weaker background or the ones who don’t have enough resources to allocate towards a hefty life insurance policy. Term insurance has a much lower premium than life insurance, so the monetary importance is clear.
Another importance of the best term insurance plan is its simple terms and conditions. Most life insurance policies have complex terms and conditions and more complex interpretations of those rules. Many a time, these result in policy rejection. But because the policy terms and conditions of term insurance are simple, anyone can easily understand them. The chances of claim approval also go up in their cases.
Major Concepts of Term Life Insurance
To further understand term life insurance and how it varies from other types of insurance policies, one must know their basic concepts. Given below is a brief description of such basic concepts of any best term insurance plan.
The Premium and Premium Payment
Premium is the total amount of money the policyholder pays to the insurance company in a year. As mentioned earlier, the premium for term life insurance is very low. But the frequency of premium payment has several options which benefit the policyholder. There are regular, limited, or single-time payment options available as per the policyholder’s convenience. In these, they can pay the premium regularly until they reach 70 years, for a fixed duration of 5 or 10 years, or in a single payment, respectively.
The Policy Term
The policy term refers to the duration of validity of the insurance policy and till when the policyholder will get death benefits. Sometimes, the policy term is until the premium payment lasts, or the policyholder reaches 99 years. But in term life insurance, the policy term will end with the premium payment term.
The Death Benefit
The death benefit refers to the amount of money the nominee will get in case of the sad demise of the policyholder. Based on different policy arrangements, it can be an amount summing up to 10 times the annual premium, 105% or 125% of the premium paid to date, or an absolute amount decided by the insurer before the commencement of the policy.
Main Exclusions
Term life insurance has only one exclusion: claim denial for death by suicide. There is also an indirect exclusion seen during the waiting period. A waiting period is the duration of time 45 days after the beginning of the policy. During this waiting period, only deaths due to accidents are claimable. Any other cause of death other than an accident during these 45 days has exclusion. And the nominee cannot raise a claim for the same.
By knowing these concepts, you will gain knowledge of the important features of term life insurance. They will help you know the advantages and disadvantages of term life insurance over other life insurance. But if you find that the benefits from term life insurance are enough for you, you must go ahead with it. Max Life Insurance Saral Jeevan Bima Plan is the term life insurance of Max Life Insurance. They have a high maturity amount based on the preferred premium amount. So do take a look at this amazing plan from Max Life Insurance before moving forward with other mediocre plans.