What Importance Does "Term Insurance" Holds in Our Lives and Everything One MUST Know

Today, we live in a world of uncertainty reading and hearing about the mishappenings in daily news and newspapers. The events are unpredictable and are often a cause of economic loss or grief. Insurance against such unforeseen set of events provides a sense of security and well being to an individual.

An individual opts for an insurance policy in two circumstances. One, if he has some monetary obligation or debt. And second, he is aware of his family responsibility. Under both situations, it is a wise decision taken by an individual to have him insured. It relaxes one's mind and body and he can work in the comfort zone making the best possible use of the available resources.

Debt or monetary obligation means that if an individual has taken a loan against property or personal loan and if unfortunately, he is no more, then the claim or death benefit from term policy will settle the loan. In that way, there will be no financial burden on the family that is left behind.

Almost every person today is aware of the word Insurance these days more specifically than before. Even those who were unaware of the term till now, it has become a part of their lives. The world is going through a time when there is a need for social and financial security.

Since the COVID-19 pandemic struck the world people are more concerned about their physical and financial health. And with concern comes the thought of the loved ones future financial and medical security. With more people flocking towards medical insurance there is a manifold surge in clientage of insurance companies.

As a matter of fact, the medical insurance policy only covers the medical expenses incurred during the medical treatment of the insurance policyholder up to the insured amount. But term insurance on the other hand provides the benefit of life cover to the insured individual for a specified term of time mentioned in the documents.

Though medical insurance plays an equally important role, but the Term Insurance cannot be underestimated. Now, what comes to mind, what is term insurance or term policy? You might be thinking that the insurance or policy which is for a specific period is a term policy. You're right, every policy or insurance is for a specific period or term but you need to know that every policy also has its conditions and limitations.

In simple terms, term insurance can be defined as a type of life insurance policy cover which provides coverage to an individual for a specific period. Or in other words, it is insurance for a certain "term" of life years of an individual. A certain amount of premium (installment) is to be paid on a monthly or annual basis to get oneself insured.

If due to some unfortunate events the individual loses his life, the benefit will be transferred to the family members of the beneficiary of the policy. This means that the amount for which an individual has been insured will be paid by the insurance company to the individual who has been named as the beneficiary/ nominee at the time of availing the policy.

The condition that applies, in this case, is that the policyholder should have been the victim during the term which has been specified in the policy. For example, if the policyholder has availed the policy till the age of 75 years and if the policyholder loses life before the age of 75 years then only the amount insured for will be transferred to the beneficiary.

Most companies today are providing up to Rs. 1crore term insurance policy cover at just Rs.499 per month, terms and conditions apply. This means that on maturity or if due to some unfortunate event the policyholder loses life within the specified term of time or years mentioned, his family or nominee mentioned in the documents are entitled to the death benefit of up to Rs 1crore.

Also note that the policy should be active or in force at the time of unfortunate happening, otherwise the benefit will not be paid. In another condition if the policyholder or the insured person is a survivor, that is, still alive after reaching 75 years of age or dies after 75 years of age, no benefit shall be paid. It is just like taking an insurance policy for a vehicle in certain ways, but not completely.

Briefly, term insurance is an affordable way to financially help your loved ones. Once the policy matures it can help your family members to replace a lost income or pay the debts you leave behind along with paying living expenses like rent or a mortgage.

One must know that there are some conditions regarding term insurance policy benefit transfer. There are some cases of death that are not covered by the term insurance policy. Also when the term of the term insurance policy is about to expire and one needs to continue the policy, here's what can be done. The term policy can be converted into a permanent life insurance policy. But for this to happen one must read the documents and contract carefully before finalizing the contract.