Term insurance plans are ideal for small budgets and offer life insurance security for a term in the insured’s life like one’s earning years or later in life for a time period. It is the most affordable type of life insurance that you can purchase.
Listed below are six things that you should be aware of when searching for the best term insurance plans:
- Unlike permanent life insurance, the term insurance plans expire and are only bought for a specific period of time. The most commonly available term insurance plans are for 5, 10, 15, 20, 25, 30 and 40 years.
- The three main types of term insurance plans are increasing term, level term, and decreasing term. An increasing term insurance policy means that the plan has an increasing sum insured, which basically means that your monthly premiums will be constant as the coverage keeps increasing at a pre-determined rate of 5% or 10% or if you expect your employment income or business to keep on increasing with time. With the level term insurance plans, the sum insured of the plan remains constant over the whole term of the purchased policy. When it comes to the decreasing term insurance, the sum of coverage over the life of the plan decreases but the plan has level premiums over the term and is normally lower than they would be for a similar level term insurance policy. The decreasing term insurance plans are useful for mortgages or loans that decrease as they are paid off and thus are much more affordable in the long run.
- Usually, the premiums do not change. The rates for term insurance plans usually remain constant over the entire period of the term. Therefore, if you purchase a 20-year term insurance policy when you are 20 years old, then you will pay the same premium until you are 50 years old.
- A convertible option is a new introduction with the term insurance plans. The convertible option paves the path for conversion of your term plan into a whole life or an endowment insurance plan, This benefit has to be exercised within the given time frame i.e. after completion of a particular no. of years of the policy.
- Term insurance plans are ideal for short-term life insurance needs and requirements. Most of the people often only need life insurance until they have built up sufficient savings and investment to become self-sufficient or may only need it in place to ensure that credit cards, loans, and mortgages can be paid off in the event that they pass away before clearing all the debts.
- As stated in the beginning, term insurance plans are the most affordable form of life insurance. You can buy a large amount of insurance relatively reasonably, and with the money saved by purchasing term insurance in place of permanent insurance, you can start with your personal savings plan. This approach is known as the ‘buy term and invests the different’, which is an economical method of building savings, similar to the way you would if you had a permanent life insurance plan while having more control of your investment and often much better returns so that your savings grow faster.
You can know more about term insurance plans and the ones that will suit your insurance needs at CoverFox as you will be able to research, gather quotes and explore further the difference between this insurance and other insurance plans.
You will be able to compare the rates and premiums at which term insurance plans are offered by different insurance companies and then make an informed decision regarding which one you should purchase.
In conclusion, it can be said that term insurance plans are more suitable for certain groups of people. For long-term perks and more protected coverage, a standard medical plan would be better. It is professionally advised that you get to know your current insurance needs first, weigh the pros and cons of the term insurance that you are considering purchasing and then reach a decision.
The best part about term insurance plans coverage is that it can be effective 24/7 after the payment has been made for the premium.