Six Not-So-Common Facts Related to Term Insurance Policy

The term insurance policy includes multiple features & benefits. You may come across various facts about term plans that you are not aware of. Let us look at some of these lesser-known facts about term insurance.

Fact 1: Premiums can be Obtained Back Upon Maturity

The main reason for people not purchasing a term policy is the lack of maturity value or return on survival. In case the insured individual has survived the term of the policy, he won’t be able to enjoy the returns because the policy does not include the elements of investment and saving.

However, there is a variant of term insurance that involves the return of premium. Under this premium, if the policyholder happens to survive the policy, then all the premium he has paid will be returned to him. However, the premium amount returned may vary from one company to another. Of course, the premium for this policy is higher than that of the pure term policy.

Fact 2: Death Benefit can be Received as Monthly Income

In case you do not want the death benefit to be paid as a lump sum amount to your beneficiary, there is one alternative for you. You can select to spread out the sum assured on your policy as monthly income at the beginning of the policy. Otherwise, it may become tough for your family members to handle, invest, and utilize the entire amount received as claim.

Various term policies come with the option of receiving the whole or partial amount of claim as increasing or level monthly income. Sometime later, while filing the claim, if the nominee wants to obtain the whole amount as a lump sum, they can get it with a discount (in case of some plans only).

Fact 3: Enhancement of Cover

During the term of the plan in a term insurance policy, you have the option of increasing the sum assured or the cover amount at the initial stages of your life including marriage, childbirth, and more. The ratio of increase in the sum assured may vary from one company to another and one policy to another.

Fact 4: Option of Additional Covers and Convertibility

Our needs and requirements are pretty dynamic. With the change in the situation around us, our needs change too. For meeting these ever-changing needs of the policyholder and their family, the term plan has the convertibility option.

This feature provides you with the option of converting your existing term plan into a whole life insurance policy within the policy term or after its completion.

There are various add-ons available on term plans that you can add for enhancing the coverage of the policy. You may add these additional covers at some additional charge. Here are some of these additional covers that can be to your term plan.

• Critical illness cover
• Partial or permanent disability cover
• Accidental death benefit
• Waiver of premium cover

Fact 5: Online Purchases Are Easier and Cost-Effective

Purchasing term insurance online comes with a host of advantages over buying a term plan offline. Moreover, online term policies have the biggest benefit of cost-effectiveness. This is because the online purchase does not include the intermediary commission cost. Hence, the company will offer a rebate on the rates of premium. The process of purchasing term policy online is quite easy because it involves less documentation and is a convenient and less complicated process.

Fact 6: Option of Selecting your Policy Duration and Payment Term for Premium

The term insurance plan provides you the option of selecting the tenure of the plan such as 15, 20, or 30 years according to your financial requirements & obligations for the future. There is no need to make payment of the premium for your entire life.

You also have the option to select a term plan that gives out single payment, which involves making payment of the premium once and getting coverage throughout the term of the policy. There is an option of limited pay too, which involves making payment of the premium for a selected term of the policy and getting a cover throughout the policy term.

The Parting Words!

Term insurance policy does not only offer you an affordable and economical option for purchasing life coverage but also offers you flexibility along with a host of benefits. If customized and chosen well, a term plan is capable of doing wonders in your financial planning. For making a well-informed choice, you must have a knowledge of all the facts related to it, some of which are included in this article.