Rohan MathawanAt the end of the day, the most important thing in one’s life is family. This is what makes it extremely important to know how you can nurture the love of your family even if you are to be no longer around. Here is a short guide to help you understand the ultimate solution to your family’s future financial security – term insurance plans.
Insurance is definitely the need of the hour in today’s times. Life is full of uncertainties, and term plans act as a hedge against them by helping in efficient planning for the financial future of your loved ones if you are no longer around to provide for them. Opting for a term insurance policy will help the income-earner of the family to cover for the financial burden that might be caused in the event of an unexpected demise. This is what makes it extremely important to buy the best plan as per your needs out of the various term insurance plans in the market.
This thread will help you by highlighting a few other things that are important when it comes to understanding term insurance plans in a better manner. You must be aware of the importance of medical tests and how they are a crucial factor before your term plan is actually approved. Let’s further understand how.
Why are Medical Tests Important in Term Insurance Plans?
A medical test is the most crucial factor while opting for a term plan. However, many insurance providers project to the policy seekers that they offer term insurance without the requirement of any medical tests. But, it is all a myth. The truth that lies behind all this is that it is just a marketing tactic that insurance companies use to gain the attention of the policy seekers.
It is important to always undergo a medical test when opting for a term insurance policy because if you do not undergo one it might lead to:
- Higher premium charges
- Higher probability of claim rejection
- Lesser coverage
Therefore, it is advised to opt for a medical test while you are seeking term insurance plans and disclose the condition of your health to your potential insurance provider.
Now, it is time to move onto why it is important to renew your term insurance plan.
Why Is Term Insurance Plan’s Renewal Important?
Term insurance plans are a financial backup to secure the financial future of your loved ones, which makes it extremely important to renew the plan on a regular basis. Renewing a term plan means the extension of the features and benefits offered by the policy. There are various disadvantages associated with not renewing your term plan, some of them are:
- Failing to renew your term plan within the time limit can result in loss of insurance coverage.
- Failing to renew your term policy within the offered time frame might cost you extra funds as you might end up paying additional interest on top of the premium amount.
Therefore, is it very important to renew your term plan within the stipulated time frame so that you can enjoy the benefits that come with it.
One thing that causes confusion in many policy seekers is whether one should opt for a term insurance plan or a traditional life insurance policy. Let’s find out the exact difference between these two types of life coverage policies.
Term Insurance vs. Traditional Life Insurance: Comparison of Benefits
It is important to avail life coverage especially with the uncertainty that prevails in today’s world. However, it can be a tough job to choose between term insurance and a traditional life plan. Below is a brief comparison of the benefits of the two.
Benefit
Term plans offer a death benefit, whereas traditional life plans offer both a death and a maturity benefit. So, if someone is seeking to opt for a policy that offers dual benefits, the ideal option would be a traditional life coverage policy. But, the main factor as to why one should consider opting for a term plan is that a higher sum assured is offered for a lower premium. Therefore, it is advised to go through your financial goals and include a term plan in your investment portfolio so that you get higher financial security at an affordable price.
Investment Perspective
Both insurance policies have their own investment perspectives. While traditional plans help to promote savings, term insurance plans offer coverage against risk at affordable prices.
Premium Charges
The premiums charged on traditional plans are higher than those charged on term plans because they offer both maturity and death benefits. At the same time, term plans are more affordable as they only offer a death benefit.
How to Reduce the Premiums on Term Insurance Plans?
It is possible to bring down the premiums charged on your term plan by following a few tips, such as:
Opt for Coverage at a Younger Age
The easiest way by which you can bring down your premiums is by opting for coverage at a young age. Term insurance premiums are directly proportional to your age. The ideal time to get one would be when you just start your career and have a stable source of income.
Payment Frequency
Generally, people prefer opting for either quarterly or monthly frequency for the premium payment. However, opting for annual payments will help you in bringing down the term insurance premium.
Tenure of the Policy
The tenure of the policy might have an impact on your premiums. Opting for a longer duration might lead to lower rates as opposed to shorter coverage duration.
Purchase Platform
The premiums on term insurance plans bought offline are generally higher as opposed to the premiums on those bought online. The main difference arises due to the middlemen involved in offline transactions, which are not there in online platforms. So, it is better to buy insurance online to cut down the premium charges.
Healthy Lifestyle
Leading a healthy life plays an important role in the decision of the premiums charged on your term insurance plans. Avoiding unhealthy habits (drinking, smoking, etc.) will help you in cutting down your premium charges, as these habits need to be disclosed in your form.
The Bottom Line
The above comprehensive guide aims to help you understand why term insurance plans are the right way to secure your family’s financial future, while also jotting down the few important factors involved in obtaining them.