Term life insurance is a type of life insurance that provides a death benefit to its beneficiaries in the event of the insured person's death. This money can be used to help pay for things like a mortgage, education expenses, or everyday expenses. The most popular type of term life insurance is a 20-year term, and most companies will not sell term insurance to an applicant for a period that ends after their 80th birthday. The policy premium is based on the age and state of health of the insured person at the start of the policy, and it remains the same throughout the term.
Some long-term policies guarantee that the premium won't increase over the term, while others don't offer that guarantee. Term life insurance offers temporary financial protection at a fixed and low cost. It is best for covering short-term financial needs, such as paying off debts, replacing your income, covering the costs of child care, and financing your child's education. For example, if a 32-year-old man has an annual income of 5 lakhs, the ideal life coverage for him would be 25 x 5 lakhs = 1.25 million rupees.
When you consider how much coverage you can get for your premium money, term life insurance tends to be the least expensive life insurance option. If you die during the term of the policy, the insurer will pay the nominal value of the policy to your beneficiaries. The terms “level” and “decreasing” refer to the amount of the death benefit over the life of the policy. When you purchase a term life insurance policy, the insurance company determines the premium based on the value of the policy (the amount of the payment) and your age, gender, and health status.
You may be able to renew a term policy when it expires, but premiums will be recalculated based on your age at the time of renewal. Once you turn 60 or older, you may be limited to buying a term of 10 or 20 years, without the option of a 30-year term. One of the unique features of term insurance is that all premiums go towards ensuring your coverage. Once your term expires, you can renew it for another period, convert it into permanent coverage or let it expire.
Term offers temporary coverage for a set number of years while lifetime insurance provides coverage for your entire life. If an Accelerated Death Benefit (ACI) is paid out and it equals your death benefit amount then your policy will be canceled when this benefit is paid out. Deaths outside India are also covered in temporary insurance plans as long as your insurer is informed in time and with all necessary details. Some term insurance plans also offer protection against serious illnesses which not only protect your family in case of unforeseen events but also throughout your life.
When deciding if term life insurance is right for you, consider all factors such as age, gender, health status and value of policy when determining premiums. If a policy is “renewable” it means that it remains in effect for one or more additional periods up to a specific age even if your health or other factors would result in you being rejected if you applied for a new life insurance policy.