How to Select the Best Term Insurance Plan?

What is Term Insurance?

Term insurance is a type of life insurance that provides coverage for a specified period, known as the “term.” Unlike whole life or permanent insurance, which covers the insured for their entire life as long as premiums are paid, term insurance only provides coverage for a predetermined period, typically ranging from 5 to 30 years. Term insurance is often used to provide financial protection for specific needs that may expire over time, such as paying off a mortgage, funding a child’s education, or replacing lost income for dependents....

How Term Life Insurance Work?

Term life insurance works by providing coverage for a specified period, known as the “term,” in exchange for regular premium payments....

Example of Term Life Insurance

For instance, John is a 35-year-old father of two young children. He wants to ensure that his family is financially protected in case something happens to him. John decides to purchase a 20-year term life insurance policy with a death benefit of $600,000....

Types of Term Insurance

1. Level Term Insurance: This is the most basic type of term insurance where the death benefit remains the same throughout the term of the policy. Premiums also remain same, meaning they do not increase over time. Level term insurance provides straightforward coverage with predictable premiums, making it easy to budget for....

Term Life Insurance vs. Whole Life Insurance

Basis Term Life Insurance Whole Life Insurance Coverage Duration Provides coverage for a specific term (e.g., 10, 20, 30 years) Provides coverage for the entire lifetime of the insured Premiums Generally lower premiums Typically higher premiums, but fixed and guaranteed Cash Value Does not accumulate cash value Builds cash value over time, which can be borrowed against or surrendered Death Benefit Pays out a death benefit if the insured dies during the term Pays out a death benefit whenever the insured passes away Investment Component No investment component Includes a savings/investment component Flexibility Limited flexibility, typically fixed term and coverage amount More flexible options for adjusting coverage and accessing cash value Policy Loans Not applicable Can take policy loans against the cash value Premium Payments Premiums are paid for a specific term Premiums are paid throughout the insured’s lifetime Cost Cheaper upfront cost More expensive due to the lifetime coverage and cash value Suitability Ideal for temporary needs (e.g., income replacement during working years) Suitable for long-term financial planning and wealth accumulation Tax Implications Death benefits are generally tax-free Cash value accumulation may have tax implications...

Term Insurance Buying Procedures

I. Online Buying Procedure...

How to Select the Best Term Insurance Plan?

Consider these factors when choosing a term insurance plan:...

Who Should Buy Term Insurance Plans?

1. Income Earners: Term insurance is essential for individuals who contribute financially to their families. It ensures that in the event of their untimely demise, their loved ones are financially protected and can maintain their standard of living....

Term Insurance – FAQs

Is term insurance renewable?...