What is term life insurance? Benefits of Life Insurance

Term insurance is the purest form of life insurance, providing your family complete financial protection against life’s risks. In the event of your untimely death during the policy period, your family will get life insurance or a sum assured, depending on the term insurance plan you purchase.

Types of life insurance 

Following are the types of life insurance – 

Level term plans 

The most basic Term Insurance Policies are level term plans. The sum assured is set throughout a level term plan. On the death of the life insured, the benefits are paid to the nominee.

TOO MANY plans

A maturity benefit is included in TROP plans. The life insured receives the whole paid premium refunded if he or she survives the insurance term.

Increasing term plan

Usually, the increasing term plans allow the policyholder to raise the sum guaranteed yearly throughout the policy term while also keeping the premium account at the same level. Premiums are, however, somewhat higher compared to those for standard term plans.

Decreasing term plan

The sum guaranteed decreases each year to match the life assured’s diminishing insurance requirements in declining term plans. This strategy is excellent for people who have already taken out substantial debts.

Convertible term plan 

A convertible term plan allows the policyholder to change from one form of term insurance plan to another one at a later point as per wish. It is a good option as it allows the policyholder to customize the plan to meet their financial goals.

Benefits of life insurance 

Following are the benefits of life insurance –

1. High sum assured at affordable premium 

A term insurance policy is a specific life insurance policy. One of the critical advantages of term insurance is its low cost. Compared to other types of life insurance, a term insurance policy has a low premium that you can pay. Another significant benefit of term insurance is that the premiums are reduced the earlier you get it.

2. Easy to understand 

You may find it challenging to grasp the insurance-specific phrases used in various life insurance policies while purchasing a life insurance policy. One of the most appealing aspects of term insurance policies is that they are simple to comprehend. 

A term insurance plan does not include an investing component because it is only a life insurance policy. You pay the premiums, and the term insurance benefits are provided by the insurer covering your life for a set period. 

3. Multiple death benefit pay-out options 

You might be making payments on an EMI for a new home, a car, or a personal loan. Your family members may be responsible for your financial obligations while you are away. It is here that the many payout choices of a term insurance policy come into play.

In the event of your untimely death, your dependents may receive a lump sum payment to assist them in managing the aforementioned financial obligations. Some term insurance policies may allow you to receive a monthly income in addition to the lump-sum death payout. Your family may find it simpler to manage recurring costs with this monthly income.

Best life insurance providers 

Northwestern mutual 

In our research, Northwestern Mutual was one of the highest-rated life insurance firms. In the J.D. Power 2020 U.S. Life Insurance Study, the firm scores fourth in total customer satisfaction, down from first in 2019. When we reviewed Northwestern’s complaint history with the National Association of Insurance Commissioners (NAIC), we found that it had a deficient number of complaints about a firm of its size.

John Hancock 

John Hancock has an AM Best rating of A+ and has been in business since 1862. (Superior). The NAIC has a somewhat higher than normal complaint tendency, but nothing out of the ordinary. 

Because of value-adding riders like the Vitality program, living benefits, and unemployment protection, as well as the company’s incentive schemes to help you get or remain healthy, we picked John Hancock as the runner-up for best term life insurance.

Aspects to consider before buying insurance providers 

Following aspects must be considered before buying insurance providers – 

Assess your financial needs 

Before choosing a term insurance policy, you must completely comprehend your family’s and your financial demands and expectations. The approach you purchase must include enough life insurance to fulfil your family’s requirements in the event of your death.

Begin by examining all sources of income, the number of dependents, current financial obligations, and your family’s living costs. It would be best if you also considered your spouse’s and children’s life aspirations.

Check the Insurer’s claim settlement Ratio (CSR)

It’s critical to examine the CSR of the insurance company you’re considering before buying a term insurance policy. The CSR is the ratio of the number of claims received by an insurer to the number of claims resolved over a fiscal year.

A high CSR indicates that the insurance company is doing everything possible to resolve your nominee’s settlement claim.

Conclusion

There are many different types of term insurance policies available on the market, each with its own set of advantages. However, it’s best if you don’t take a one-size-fits-all strategy when it comes to term insurance benefits. 

You should get enough life insurance depending on your financial obligations and add-ons based on the type of coverage you require. Before you acquire a term insurance plan, make sure you know and comprehend the numerous aspects of obtaining one online or offline.

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