In today world where uncertainty is writ large because of various reasons, it is important to find out ways and means by which one can secure the financial well-being of the family and of course the main breadwinner. Towards this objective it is important to have the right kind and right type of insurance. Amongst the many types of life insurance there is no doubt that term insurance is considered to be one of the most popular because of some obvious benefits and advantages. However, there is lack of knowledge and information for many. Therefore it would be worthwhile having a look at a few of the pros and cons as far as this type of insurance product is concerned.
Understanding Basics Of Term Insurance
Put in plain and simple words, term insurance is an insurance policy which helps the insurer to have coverage of his or her life for a certain period of time. This period is referred to as the term. If the insurer unfortunately dies within the term of the insurance policy the death benefit will be paid to his or her nominee. If nothing unforeseen happens during the term period there are two options available. If one chooses term plans with return of premium then the insured gets backs the premium paid with or without bonuses. On the other hand, the insured might choose to go in for a low cost term plan where he or she will not get return of premium after the term of the policy has expired without any eventuality such as death. While the latter might be a low cost option, it would always be ideal to go in for a term plan with return of premium because it ensures that periodic insurance premium payments are protected in the event of the insured remaining alive after the completion of the term.
Why It Makes Sense To Choose Term Plan
Simplicity is one of the hallmarks of term plan insurance. It is easy to understand and there are no complicated terminologies and other such things. It is much easier to manage and follow when compared to endowment and other such policies. It is all about deciding on a periodic premium that you are comfortable with and the insured can get the necessary life and other covers.
Another reason why it makes sense to opt for term plans is because it is very affordable and comes with low premiums. Though the returns on maturity may not be very attractive, when it comes to choosing a basic product to protect a person’s life than opting for a suitable term plan with return of premium would certainly be a great idea. Even with a few hundred dollars of premium each year, it is possible to get one’s life covered against death, accidents and disability.
However, there are some disadvantages with this product. The term plan premium rates increase steeply with age and therefore for many who are beyond the age of 60 going in for a term plan would be extremely difficult and even un-affordable. However, when looked at in totality it certainly is a great insurance product.