Buy a term plan and secure your family
I’d like to begin with putting the obvious out there - almost all of us are aware of the ‘auspicious’ day of 1st April. In fact, many of us wait for this day from the moment the clock hits 12:00 on 1st January. After all, who minds some time to let loose every now and then?
Of course, who does not like to pull some pranks and jokes on their friends and family? Sharing those jokes on the social groups on Whatsapp, sounds exciting, doesn’t it?
Well, what I am going to say next, may not be as exciting as all that has been said above…
Intentionally, or unintentionally, most of us have been pulling a prank on ourselves and our loved ones by not being financially covered for any future uncertainties that might occur. Even worse, many among us even fool ourselves by thinking it is not important to hold any sort of term life insurance plans. What we often overlook is the fact that life does not a particular need a day to pull a prank on us.
People are often fooled by the misconception that it is unnecessarily expensive to hold a life insurance policy. Well, to clear that up for you, not all insurance policies are expensive. Term life insurance plans provide sufficient coverage while being budget-friendly at the same time.
In this thread, are the bright and the dark sides of term life insurance plans along with a few instances where they may come to use in your life and why this April Fools’ Day, it is important to save yourself from any prank that life may pull.
The following are the advantages of term life insurance:
Term life insurance plans are comparatively easier to understand than the other types of insurance plans that cover risk with savings. These plans that consist of risk along with a savings component are commonly known as cash value plans.
It is not an easy task for a layman to divide the payments in the form of premium made by him into the cost for risk cover and the amount that is actually being invested as savings.
It can often be complicated for people to plan out their financial goals around the cash value plans. There are also rules laid out for governing various factors. At the same time, term plans are as easy as one can get - just pay the premium charges and get coverage for the tenure that has been set.
The term insurance policies can be easily compared based on the price across each other. This is because of their easy to understand and similar structures. This had led to the market being competitive. There are lesser information problems faced by the buyers in the market, which is the reason behind the term market being more price-competitive as compared to the market for cash value plans.
If you are owning a term insurance policy, it is easier to opt-out as compared to opting out of a cash value policy. If you stop honoring your premium payments, your risk cover ceases and the term of your policy ends. There is no amount payable to you as there is no element of savings in term life insurance plans.
However, on the other hand, cash value policies will only give you the entire promised survival benefit amount if you hold it for the entire term. If you stop paying your premium mid-way you will suffer a loss as the savings portion of the policy cannot be recouped without certain deductions.
On top of this, many of the term life insurance plans are either renewable or convertible. The renewable term plans allow policyholders to go in for another term plan without having to undergo a medical examination. Whereas, the convertible term plans allow policyholders to convert their term policy into an endowment plan for the same sum assured with the increase in the premium charges.
The premium charged on term life insurance plans is comparatively lower as compared to that charged on the cash value insurance plans.
Just like everything in life, even term life insurance plans have some downsides to them:
With having laid out the advantages and disadvantages of term plans, here are some of the situations or instances that may occur in life where they can be your blessing in disguise:
With that being said, it is important to know that term life insurance plans are an important part of a good investment portfolio. This investment is the bare minimum that can be done to financially secure the future of your loved ones.
Last, but not the least, a very happy April fools’ day! I hope this 2020 you can pull pranks on others and laugh out loud with term insurance.