Term insurance is pure life cover where you pay a fixed premium during the policy tenure. In case you pass away during this period, your nominee/s receive the death benefits under the policy. Most term plans do not offer survival benefits; however, some insurers offer term insurance return of premium (TROP) on maturity.
Here are four benefits of availing of term insurance policies.
1) Ensure financial security
Life is uncertain and you do not want to risk the financial security of your family in case of your premature demise. Term insurance plans offer a lump sum payment of the death benefits to your family in case of your demise. This ensures they do not have to deal with financial difficulties while dealing with the emotional distress of losing a loved one.
2) Meet your debts
If you have taken huge debts like a home loan, repaying the amount in case of your demise may become difficult for your family members. If they are unable to make the timely repayment, they may have to vacate the home. This situation is easily avoidable with a term plan. The lump sum death benefit may be used for repaying the outstanding loan amount.
3) Safeguard your children’s future
Children’s education is an important objective for parents. Higher education is expensive and you need to plan for the same. An excellent way to ensure your children’s education is not affected due to lack of funds in case of your untimely demise is availing of a term plan. The amount received on your demise may be used to invest in various investment avenues that provide the amount required to meet the educational expenses.
4) Avail of accidental death benefits
For a nominal increase in the premium, you may opt for an accidental death benefit rider. This will pay higher death benefits to your family in case you pass away in an unfortunate accident. Some policies include installment-based payouts in case you are permanently disabled in an accident. This is beneficial in replacing the loss of income due to your inability to work because of the disability.