Life is unpredictable. As much as everyone would love to control and conduct their lives as they wish, it isn’t possible. Most things in life come unannounced and uninvited. This unpredictable nature of life is where insurance comes into play. Life insurance in today’s time is nothing short of a necessity. It doesn’t matter if you are young or old, married or single, getting good term insurance is something that you will not regret.
While life insurances come in various sizes and shapes which may suit a person’s needs or demands, a term life insurance is a little different than other life insurances. All kinds of life insurances assure you financial protection and/or compensation in certain cases.
But before moving ahead with the details of what a term life insurance provides you with, let us understand what’s term life insurance? In simple words, a term life insurance basically covers the customer for a period of time or term and offers a tax-free, one-time benefit or payment to the designated beneficiaries in case of their passing away.
Term insurance plan is a kind of life coverage plan which covers the danger of sudden passing away. In the event of the death of the insured person, during the term of the approach, this strategy vows to pay a ‘death advantage’ or ‘death benefit’. This kind of an insurance plan is the least complex and most established type of affirmation and allows payment of the said sum of money guaranteed on death if passing away happens inside the fixed terms and conditions.
A term insurance plan guarantees high coverage at comparatively low expenses, permitting you to benefit from a high sum promised which would financially support your family’s monetary necessities in case of your untimely demise. Thus, it provides monetary protection while compensating your loved ones against the financial loss of your premature death as they cope with the death of a loved one.
Difference between term insurance and whole life insurance?
Term insurance refers to the payment of premium for a term. If the policyholder suffers an untimely death within this time frame, the insurance company is liable to pay the death benefit amount to the nominee. While in case of a whole life insurance dual benefits of protection of life and investment are assured to the policyholder. These plans may offer an advantage of cash accumulation built during the term of the policy. However, the sum provided as the death benefit is way higher than maturity benefits provided by whole life insurance.
While many people choose to go for term insurance, it always gets new players in the market who are willing to invest, dazed and confused. Even though making a choice may seem tough at first, getting suitable insurance and managing your finances can save you a lot of stress in life later.
Term insurance plans usually offer an extremely low premium as compared to regular insurance. This makes it a deal wherein the premiums are low but benefits will be high. It is also notable that all the premium sum is allocated to providing insurance coverage, in the case of term insurance. Thus, no money is invested which also makes it less liable for losses or lower than expected sums. Term insurance plans are generally more affordable than regular life insurance and even if people have a regular life insurance plan, getting another term insurance is something that many people do.
Term insurances basically cover risk and in case of an untimely death of the policyholder, a large sum of money is provided to the nominee. As ridiculous as it may sound many people view this as a win-win situation because it basically allows low premiums and ensures high returns or benefits. In the case of regular insurance, the value is built over a period of time as premiums might be invested.
To make it even simpler let’s take an example of Mr X. Assuming this person is in his mid-thirties, earns $100 each month and is looking for good life insurance that suits him. Now if he opts for a regular policy he will have to pay high premiums each month and end up getting a meagre sum as savings for retirement. In this case, his returns are pretty low. However, if he decided to invest in a term life insurance with a coverage of $400,000 then by just paying $15–18 in a 30-year term life insurance he gets way higher returns.
The future sure is predictable but your loved ones’ lives in the future can be predictable if you decide to take the right steps. While you may be surrounded by a dilemma regarding life insurance make it is essential to get one because there’s never a right time for this, today is the best day. Plus, let’s face it term insurance can really be a blessing in disguise.
Tommy Williamson did his degree in psychology at the University of Edinburgh. He has an ongoing interest in mental health and well-being.
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