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Term Insurance
A Clear Guide to Term Insurance
Term insurance is a type of life insurance that provides financial protection for a specific period, called the “term.” If the insured person passes away during this time, the nominee receives the sum assured. If the insured survives the term, there’s usually no payout.
1. What Does Term Insurance Cover?
Term insurance is designed purely to provide a death benefit. It doesn’t have savings or investment components. It’s an affordable way to ensure your family gets financial support if something happens to you.
2. Why Choose Term Insurance?
It’s cost-effective and straightforward. Because it only pays out on death during the policy term, premiums are much lower compared to other life insurance plans with savings or investment features.
3. How Long Should Your Term Be?
Choose a term that covers your family’s financial responsibilities like loan repayments, children’s education, and daily living expenses. Common terms range from 10 to 30 years.
4. Sum Assured: How Much Coverage Do You Need?
Calculate your family’s future financial needs, including debts, living costs, and goals. A common rule is 10–15 times your annual income, but it depends on your situation.
5. Key Benefits of Term Insurance
• Provides financial security to your family after your demise
• Affordable premiums compared to other life insurance plans
• Flexible terms and coverage amounts
• Can be combined with riders for extra protection (critical illness, accidental death, disability)
6. What Are Riders?
Riders are add-ons to your term insurance policy. Examples include critical illness cover or accidental death benefit. They increase protection but also raise the premium slightly.
7. Important Things to Consider
• Make sure you disclose your medical history honestly
• Review your policy regularly to adjust coverage as your needs change
• Choose a reputable insurer with a good claim settlement record
8. Term Insurance vs. Other Life Insurance Plans
Unlike whole life or endowment plans, term insurance doesn’t build cash value or pay out if you survive the term. It’s purely protection for a defined period.
Quick Checklist Before Buying Term Insurance
• Adequate sum assured for your family’s needs
• Suitable term length covering major financial obligations
• Check for riders you might need
• Transparent policy terms with no hidden exclusions
• Good claim settlement ratio of the insurer
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