Term plan insurance provides cover for the specified period (term) stipulated on the insurance policy. Many companies offer level premiums for the whole tenure of the insurance. In contrast, others offer to increase and decreasing benefits and others the option to convert from term insurance to permanent life insurance. The insurance company calculates the premium you pay for the term plan insurance depending on your age and health examination. A medical examination and family history may be necessary to determine your life expectancy; therefore, the premium rate varies from one individual to another.
Here is what makes a better form of insurance:
It is affordable
Term plan insurance rates are generally more affordable when compared to permanent life insurance rates. It is because term insurance companies always hope that you will outlive the insurance expiry so they won’t have to repay any benefits. On the other hand, permanent life cover is expensive because no matter which time you die, they have to pay out the cover.
Term insurance is less expensive because it offers financial protection for a predetermined period.
It is more adjustable
With term insurance premiums and benefits, you can adjust as time changes. For instance, coverage can last for a whole year or more but with an annual renewable term life. Alternatively, you can sign up for a five-year term as you cover a critical short-term debt such as your child’s tuition.
In addition to that, policies are available from as little as a year to as much as 30years. You can match the insurance term plan to your mortgage or school fees payment to decrease as such debts decrease and eventually disappear.
More suitable for younger individuals and families
Since term insurance is financial security for a short period, it makes a suitable option for younger families, newlyweds, or young individuals. It is because such people have a lot of expenses such as bills, auto loans, mortgage loans, student loans, to mention but a few. Since term insurance offers you a way to pay an affordable premium each month, it lessens your financial stress and requirements.
Moreover, since there is an option to convert the term insurance to permanent life insurance later during the period, should the necessity arise. Hence, it keeps you from having to qualify for another insurance policy when you are older.
Easy to understand and undertake
Since term insurance is a simple insurance cover, it is easy to understand and implement. The only significant decisions you have to make is choosing the insurance company, the policy tenure, and the insurance benefit amount. And as long as you provide your premiums, your family is covered for the time before the policy expires.
Undelayed payments of profits
Suppose the policyholder dies within the specified period when the policy is operational, full benefits are payable to the family without unnecessary delays. Since the insurance proceeds are not part of the probate estate unless specified, the proceeds are payable immediately without any delays from the estate’s administration.
The bottom line
To many people, term insurance plans offer an affordable, flexible, and straightforward way to protect your family financially if anything happens to you. Plus, it can act as collateral, enabling you to qualify for other personal loans. A term policy is sufficient to convince lenders to loan you as long as you have good credit. Generally, term insurance is a go-to solution for your life insurance requirements.