Term Insurance

The emotional turmoil that a death causes in a family often gets aggravated by the financial hardships they face. Often the immediate family members of the deceased are thrown into the vortex of financial uncertainty and this is the result of their lack of foresight. Life insurance policies act as the saviors in such a situation because it covers a variety of costs that are incurred by the family of the deceased. It is very important for a person to plan for the financial prosperity of his life as well as for the family members when he/she is no more with them.

Term insurance is one such policy that can help the family tide over the financial mess when the policy holder passes away. Employee benefits are mostly not extended to the family members of the deceased and even if it is extended by some companies, it is not sufficient to cover all the expenses to meet long term needs of a family.

Also known as the pure form of a life insurance policy, term insurance covers the policy holder for a stipulated time period only. The insurance policy is going to expire at the end of the term and the immediate family or beneficiaries are covered. This is of great help to the families who want to pay off debts and other expenses immediately after the death of the policy holder.

Finding out the right term Insurance coverage depends on the needs of the policy holder. The insurance is a legal contract which would provide the necessary cover as mentioned in the policy details after the end of the term for which the policy has been purchased.

The two different types of term insurance are Level Term Insurance and Annual Renewable Term insurance. Level term insurance is an insurance policy which would cover the policy holder for a fixed term of 10, 15 or 20 years. There are no changes in the premium rates and the policy holder’s family or beneficiaries would be provided with the necessary coverage at the end of the term or death of the policy holder, whichever is earlier. Annual renewable term insurance policy needs to be renewed on yearly basis and can be extended whenever the policy holder wishes to do so.

Some of the benefits of the term insurance policy are as follows:

  • The beneficiaries get an amount equaling the policy’s face value after the policy holder’s death
  • Term life insurance is cheaper than the permanent life insurance policies making it more affordable
  • A few types of term life insurance policies can even be converted to permanent life insurance policy
  • A term insurance policy can be extended to a maximum period of 30 years