Here's Why Term Insurance is the Right Pick for a Home Insurance Buyer

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  | Published: 11 April 2020 | Last Updated On: 08 February 2021

Buy a term plan and secure your family

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Each and every one of us dreams of living a luxurious life one day. Not all are blessed enough to get all material comfort right from birth. Some people really have to work hard to earn this type of leisure. In today’s age, the easy availability of loans has made it comparatively easier to enjoy the dreamed comfort – of a huge house and a luxurious car.

However, loans do not come as easy as we think – they come with a big responsibility for timely repayment. As an investor in the market, it is important for you to have a proper strategy and it should aim at keeping a check on all the unnecessary expenditures so that you can pay your monthly installments on time.

Constructing a properly furnished home can end up putting a burden on one’s finances. In such a situation, you can take the help of home loans that will help you in fulfilling this dream of yours. But, at the same time, you must also keep in mind that loans require to be paid well on time, even if you face an unfortunate situation where you are not around anymore. You must prepare your plan accordingly that your family and your property are secured, even in your absence. This is where term insurance comes into the picture.

A term insurance plan secures your loved ones against paying off any existing debts in an unfortunate situation of your untimely demise. There are different types of term plans available in the market to suit your requirements and needs. In the case of home loans, you should opt for a term plan with sufficient sum assured depending on your annual income and the loan amount. The term insurance plans in the market are offered at reasonable premium charges, however, they vary from one borrower to another and across factors such as income, age, and lifestyle.

Term Insurance: Briefly Explained

A term insurance plan is a life insurance cover that is provided to the beneficiary of the insured individual for a fixed tenure. In the unfortunate event of       your demise during the term of the policy, the sum assured is offered to the nominees as a payout. Some insurance providers offer this in two options – as a lump sum or as monthly payouts. In case of a lumpsum payout, the nominee receives the entire amount at once and the contract of the policy is terminated thereafter. In the case of monthly payouts, the sum assured is paid out over the course of time – acting as a regular income stream for your loved ones.

Some insurance providers also offer other types of payout plans. It depends on you to choose the right one as per the needs and requirements of your family members.

Benefits of Term Insurance

The following are the advantages offered to the insured individual by term plans:

  • The well-known feature of this type of life insurance plan is the death benefit that is offered. In case of the insured’s sudden demise, the claim amount is paid out to the beneficiaries.
  • These plans help in ensuring that all of your existing loans and liabilities are cleared when you are no longer there.
  • Term plans also have a wide array of add-on riders available that can be added to the base policy. These additional benefits thereby increase the scope of coverage that is provided under the plan and also provide improved claims.

Features of Term Insurance

A loss of a dear one is something that can never be replaced. While you have to fight both emotionally and mentally over the demise of the deceased, this type of life insurance i.e, term insurance guarantees that one thing you won’t have to worry about is your financial security. It ensures that your family still has the financial independence they require to help them sustain their current lifestyle, even if you are no longer there. Some of the key features of term plans are:

Fixed Benefits

The term insurance for the protection of your home loan ensures that the sum that is due in your home loan is given to your nominee at any point of time during the policy period, after your demise. This will help your family members in clearing off the outstanding home loan amount. The remaining amount can be used by the nominees at any point in the future when it is needed.

Survival Benefits

Generally, term insurance plans do not come with any survival or maturity benefits. However, there is a plan known as Term Return of Premium that has introduced the feature in which the premium of the plan is entirely given to the person who is insured if he or she survives the policy tenure. This type of plan has become popular recently as it is a source of savings along with the benefits of an insurance cover.

Change of Lender is Possible In Case of Home Loans

You can at any point of the time change the lender of your home loan without having to abandon your insurance premiums. Also, you can continue with your term plan even if you have repaid your home loan. You can either keep paying the premiums or simply terminate the term plan once your loan is cleared, depending on your choice.

Tenure of The Policy

A term insurance plan has a minimum term of 5 years, generally. The maximum tenure of the policy can range from 25 years to 25 years, depending on the insurance provider. Ideally, you should opt for a longer tenure as it will keep a constant premium over the entire period of the plan. You should choose the period of the plan that is suitable as per your needs and requirements.

Entry Age

A policy seeker must be of a minimum age of 18 years to opt for a term insurance plan. The maximum age limit generally is 65 years. The younger is the age at which you opt for insurance, the longer should be your term of the policy. This ensures that you have a  constant premium for the same amount of cover.

Additional Riders

Add-on benefits can be added to your base policy to increase the scope of coverage. This comes in handy when we talk about increasing the financial back-up of your loved ones in case you are no longer there. If you are holding a home loan, you should consider opting for the critical illness rider. This benefit acts as a substitute income in case of an unfortunate situation where you are diagnosed with any critical illness such as cancer, kidney failure, etc.

There are several other riders provided by the different insurance providers, such as the accidental death benefit, permanent or total disablement, waiver of premium rider, among others. As per your working situation and your lifestyle requirements, you can opt for the add-on rider that suits your case and maximizes your benefit in case you are faced with any unfortunate incident.

Bottom Line

As this thread suggests, there is a variety of options available when we talk about the term insurance plans in the market. It is important for you to compare the different plans available, along with their premiums, coverage, benefits and perks, inclusions and exclusions of the policy, before coming to any decision. You should spend quality time in comparing the premium charged from various insurance providers and various sources, both online and offline, and select the one that is most affordable as to your requirements.