5 Things You Never Knew About Term Plan Insurance

Life is full of uncertainties. You never know what is to come next. You can only be prepared for them. A term plan insurance will help protect your family if the unimaginable happens. Buying a term plan insurance will help you live peacefully while securing your family's future.



Let us look at term plan insurance and five things you never knew about it in detail.


What is Term Plan Insurance?

In simple words, term plan Insurance is a legal agreement between the insurance provider and the policyholder to offer life cover to the beneficiaries in the event of their demise. The death benefit offers an assured sum to the nominee filed by the beneficiary while buying a term plan insurance. Premiums paid for a term plan insurance are paid annually. The assured sum is thus paid from this plan corpus.


Term plan insurance is a form of life insurance that provides the ultimate life cover for unfortunate events. As you learn more about term plan insurance, you will realise that it plays a significant role in financial planning, especially in the long run.


5      Things You Never Knew About Term Plan Insurance


1.    Term Plan Insurance Coverage: Before buying a term plan insurance, you must know the amount of coverage you would require for the security of your family in case of your unfortunate demise. You can use a term life insurance calculator to find the best coverage. You can perform this simple calculation by following a few steps mentioned below.


Step 1: Figure out the expenses of your family every month. Then multiply the figure by 150; the multiplier of 150 will take future inflation into account.


Step 2: Now you must keep in mind your liabilities, such as credit card bill payments, home loan debts etc.


Step 3: You must subtract your existing flexible assets, such as fixed deposits, mutual funds or even stocks.


Step 4: Now imagine the next 15 years; how would it look for your family? Count the expenses for future events such as a wedding or higher education plans for your children and add that.


Step 5: Add the retirement fund you would like your spouse to have on their retirement.


2.    Term Plan Insurance Tenure: It is crucial to determine the tenure of your term insurance plan. The duration you need it for is important because the tenure should not be too short; otherwise, the insurance will lapse early. On the other hand, if you opt for a longer tenure, you would have to pay higher premiums.


To determine the best tenure for you, you will have to calculate the year by which your stocks, FDs, provident funds, mutual funds, etc., combined will increase in amount compared to the maturity value of your term plan insurance. It is said that the year these two figures coincide should be the year till which you would need life coverage.


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Coverage Per Rupee of Premium: After investing in a term plan insurance, you must rest assured. What is the need to buy one? You buy insurance to live a stress-free life; therefore, when buying a term plan insurance, you should look for an insurance provider with a market reputation or companies that are more reliable.

Term plan insurance is a hard commitment since it remains valid for long. Hence, it would help if you chose term plan insurance with affordable premiums and a reliable insurance provider.