Insurance Policy

Life insurance provides a modicum of financial relief to families on the death of their sole bread earner. Such families may have an income that is just sufficient to eke out an existence at a moderate standard of living. Term life insurance is just ideal for such families.

This article endeavors to increase your knowledge about term life insurance.

So, what is term life insurance all about?

Term life insurance provides only protection against the fear of death of an insured person coming true within the applicable term of a term life insurance. If the insured person fails to die within the current applicable term of a term life insurance policy, no money is returnable to the insured person by a life insurance company.

Further, no money is payable, if the insured person dies just a day after the term of such a life insurance policy expires. The money is not payable also if the due premiums have not been all paid to the insurance company.

Due to all these reasons, the premium payable on such a policy is one of the lowest. This is based on its comparison with the premium under any other life insurance policy.

A term life insurance policy is therefore eminently suited for low-income single bread earner families.

The 'on death of the insured within the term' proceeds of a term life insurance policy are normally utilized by such families to pay off their debts, mortgages, on education of children, and arrange for funeral costs of the insured person.

A term life insurance policy may be renewed after the expiry of the current term. The repercussion is that the premium increases.

A term life insurance policy is available for various terms. The annual term life insurance policy is not popular at all because of the low probability of an insured person's death within that year. Other terms available under this policy are those which are enforceable for five years, ten years, fifteen years, twenty years, and twenty five years.

As per your convenience, a life insurance company can tune the premium amount such that it varies telescopically with your income, within the extent of the tenure of the term chosen by you. However, the insurance company takes sufficient care in this to protect its own interests. The insurance company can also keep the premium amount at a fixed value for all the years during the tenure of the contract.

A term life insurance policy may also be convertible into another type of life insurance policy. However, that depends entirely on a specific life insurance company. The conversion terms will also depend on the life insurance company, which performs the conversion.

Term life insurance is generally not an automatic choice for well-to-do people, who have much better options, although some do opt for it. They are much more focused towards return on investment.

Insurance Policy |