You might wonder if there is anything cheaper these days than Insurance. Individuals can choose to insure their loved ones with insurance. This covers them for the cost of any unfavorable event that may occur, even if it happens within one day.
A family’s compensation for their loss does not have to be expensive, especially when you consider the cost of the family’s ability to resume their normal activities and lessen the income of the breadwinner each month.
Strangely, however, we strive to teach just that. It is vital that everyone who lives in a family structure has adequate insurance. This is the simplest coverage that a family can have against an unforeseen loss.
Insurance companies’ Marketing Philosophers use their imaginations to create catchy names for a range of schemes. They also combine a few insurance methods to make it more appealing to customers or prospects. It is a wonderful job done by great people. It all boils down to the usual marketing strategies, and nothing more.
There are only two types of life insurance. The first is Insurance that pays upon the death of the policyholder, also known as Risk Insurance or Term Insurance. Pure Endowment Insurance is the other type of Insurance that pays for the policyholder’s survival up to the specified term. Pure Endowment and Term Insurance are the two main forms of Life Insurance philosophy. Modern Life Insurance schemes are extensions of or a combination of these two theories.
Term insurance, as its name implies, is Insurance that lasts for the selected term. If the policyholder or life assured dies within the term of the policy’s term, the Sum Assured or policy amount becomes payable to the heir apparent, or nominee, according to the terms of the contract between the Insurer or the Insured. The policy does not provide any guarantees that the policyholder will be able to receive any returns if he is alive during the policy’s term. The insured loses control of the policy if the event doesn’t occur.
The insurer and the insured are both very familiar with the process of maintaining the policy. After assessing the risk, the insurer determines the amount of premium that will be required to cover the risk. The policy is then issued. The job of an underwriter is done. Once the policy has been accepted, the policyholder should continue to pay the premiums for the chosen term. This policy pays the benefits only if the insured dies during the policy term. Otherwise, nothing is possible.
This is the idea of Term Insurance. You can combine Term Insurance products with additional features such as –
Riders and add-on benefits
Double Accident Benefit.
Riders can be added to the policy conditions. A double accident benefit allows you to get an additional sum equal to or twice the Sum Assured in the event of your death. The insured must pay a premium to be eligible for this benefit.
The benefits of term insurance:
Family needs
Term Insurance is a Risk Insurance Scheme that caters to the family. Although we are referring to the financial benefits, the emotional loss cannot be replaced. Life Insurance is not considered to be INDEMNITY, which is only applicable to Non-Life Insurance.
Low cost, High Sum
The Insurance premium covers risk for life and is therefore very affordable. The Sum Assured’s purchase value or insurance amount can be more at lower ages, when earning capacity and health conditions are best. An average annual premium of Rs.2500-Rs.2700 for a 25 year old standard life with a Risk Sum Assured Rs.1 million is around $60-$70. This figure can be found in nearly all Life Insurance Companies around.
The earlier the better
Insurance professionals always emphasize that the premium will be lower if you go earlier. The policy’s purchase value increases with age. Because normal life is more difficult, people are more likely to develop health problems such as cardio and respiratory problems. The average life expectancy is used to calculate the premium. The premium continues to rise from approximately 25 years to the maximum of 70 years if we consider the current average age. It is therefore a good idea to get insurance early.
Tax Benefits
A combination of lower insurance premium and a high amount assured that is affordable can result in a reduction in your annual income. You will also be eligible for income tax holidays up to a certain amount. To reduce your tax liability, insurance premium is a great investment.
Collateral Security
This is called a mortgage in insurance terms. All purchases today, including those of houses, flats, consumer goods, and education, are made through loans from banks or financial institutions. To ensure that consumers are not liable for any unpaid loan amounts, banks and finance companies often seek collateral security. Term Insurance is a good choice because it offers a high amount of protection at a low premium. In addition to the loan EMI, the premium will not be a burden on your pocket.
Conclusion
The Term Insurance Scheme has a few advantages, except that it is a risk-based scheme and does not offer any returns on premium investments. It forfeits any premium that was paid on a regular basis or as a one-time payment at the end of the insurance period. Term insurance is the most affordable and best option if you consider Insurance to be a fundamental element of human need.