Term insurance is one of the most chosen life insurance plans that provides coverage for a specified period, and if the policyholder expires before the term expires the assured sum is given to the nominee of the policy.
Term plans are meant to provide financial support to the family in the absence of the policyholder, and this assures a definite amount of coverage for the family. Term insurance also helps the policyholder to get tax benefits on the premiums paid towards the policy. There are a few factors regarding term insurance that we are not aware and are listed below.
Reasons Why The Premium For Term Insurance In Low
The premium amount for the term insurance is lower as compared to any other insurance premiums as this isn’t any investment. Only on the death of the policyholder, the nominee gets the maturity benefits if the death occurs before the term expires. If the term expires before the death of the policyholder, no survival benefit is received.
Difference In Premium Amount
The premium amount differs depending upon the years for which the term is bought. For longer tenure, the premium for the term insurance is also high.
Eligibility For The Best Term Insurance Plan
Different companies and have different eligibility criterion for term insurance. Generally, the minimum age for having term insurance is from 18 years to maximum age of 65 years.
Are Term Insurance Plans Convertible
Term insurance plans have convertible options at no extra fees. One can convert term insurance plans to endowment or whole life insurance plans any time during the tenure of the policy period.
Consequences Of Missing Premium Payment
If the payment of premium is missed, then the first thing to do is check on the grace period. In the case of annual premium payment, the grace period is one month, while in the case of half-yearly, it is 15 days. Within this time period, the missed premium can be paid, but if the grace period is missed the plan lapses and the previous premiums are not accountable.
Can A Term Insurance Plan Be Surrendered?
Term insurance can be surrendered if a policyholder doesn’t wish to continue with the plan. A marginal cost is charged as the surrender fee, which isn’t applicable if the policy is surrendered after 5 years of purchasing the plan.
Fee Deducted For Surrendering Insurance Plan
You can terminate the plan anytime if you do not find it sufficient according to your requirements. On surrendering the plans after 3 years of taking it, the surrender value can be 30 per cent of the premium paid. At times the insurer reduces the premium paid during the first year.
Along with these, one needs to also look for a plan which gives the options of convertibility and riders. Like in case of convertible plans, policyholders can change their existing term insurance plan to a permanent life insurance plan during the policy period or at the completion of the plan.
One can also add riders on the existing term insurance plan like accidental death benefit, critical illness rider, waiver of premium rider or permanent or partial disability rider.