What is Term Insurance?
Term Insurance is the most basic form of life insurance. In the event of the death of the insured, the nominee is paid the ‘sum assured’ amount.
Sum Assured, Premium & Tenure
Sum Assured is the amount that is paid out in event of death. This can be a lump sum amount, monthly installments or a mix of both. The premium to be paid can be monthly, quarterly or annually. The policy will be in force for the tenure chosen. Premium amount is based on a variety of factors such as age, medical history and tenure chosen. Premium paid towards term insurance is tax deductible under Sec. 80C of the Income Tax Act.
Is the premium amount returned at the end of the policy?
For a pure term insurance plan, the premium amount is not returned. That is why the premiums are quite low compared to other life insurance plans in which the premium is returned. A payout takes place in the event of the death of the insured. There are variations of term insurance which come with the option of return of premium. Read the policy brochure thoroughly to check these points.
Requirements for Term Insurance
Apart from basic ID documentation, you may be asked to take medical tests based on your age. Most term insurance plans have an upper age limit for enrolment as well.
Does Term Insurance cover only death?
Most life insurance companies have options for adding accident and illness to the term insurance with an added premium. In event of accident or illness, a certain payout is made or the premium is waived off for the rest of the policy term.
Term insurance is crucial if your family depends on your income. Consider buying a policy online which is generally cheaper since there are no agent commissions involved