Term Insurance Guide

A term insurance policy is one that covers the risk of premature death. The policy insures an individual for a specific term and covers the individual’s risk of death during the specified term. If the insured dies, the policy pays a guaranteed amount to the surviving family so that the family can deal with the financial loss that they have suffered.

For instance, say an individual buys a term insurance policy for 20 years for a sum assured of Rs.50 lakhs. After 10 years, the individual dies in an accident. In this case, the term insurance policy will pay Rs.50 lakhs to the family to cover their financial loss.

In a term plan, just like all other life insurance plans, the premium is fixed for the entire duration. Also, the premium depends on the age at which you start your policy.

So, if you opt for a term plan early in life, you would get the maximum benefits as your premium would be fixed at that age while you continue to receive the benefits of the plan throughout the policy tenure.

For a middle aged man like Bhupinder, who dotes on his family, his loved ones mean everything to him. His children - a boy and a girl aged 12 and 14 years - are like his prized possession. Everything was going fine in his beautiful world that involved 6 people, including his parents, spouse and his children. However, the happiness didn't last for long. One fine day, Bhupinder was diagnosed with a terminal illness that was fatal in nature. His family was shattered, as was Bhupinder, to know about the disease. He never got involved in any sort of bad habit like drinking, smoking, then how come he ended up with such a fatal disease.

Now Bhupinder is under medical supervision. However, no one knows how things are going to advance from here. While sitting in his hospital bed, all he could think is that he should have purchased a term plan for his family way back when his friend was buying one and asked him if he was interested. However, Bhupinder was hale and hearty at that time and so he discarded the idea completely. Now, at this stage in life, all he could wish is to go back in time so that he could secure the future of his kids and other family members. But alas! It is not possible now.

So, you see how important Term Insurance can be in such situations when you feel helpless in front of destiny. For such times of crisis, you must go for a term plan, which acts like a financial security that allows your family to sustain comfortably in your absence. Though, it cannot fulfill the loss of the family member, but it can at least make sure that your family doesn't have to compromise on the basic needs and amenities required for their livelihood.

However, the irony with term plans is that they become active when you become extinct.

So, if you buy a term plan of 1 Crore or any other amount, you can be sure that your family will receive this amount in your absence. This is unless you die by committing suicide within the first year of your policy or you die while committing a crime. Other than these circumstances, you are sure to secure the lives of your loved ones financially even after you are gone.

Term insurance is quite easy to comprehend. However, to make things crystal clear, here are some key features explained below.