5 Reasons Why Term Insurance Plans are a Must Have

Term insurance is the simplest and also the affordable form of insurance. In case of the death of the policyholder, the nominee receives a lump sum payment from the insurer. If the policyholder outlives the policy, he/she receives no benefit. But on the other hand the premium for term insurance is minimal. Hence opinion about this type of insurance is torn.

But term insurance does have some unique benefits of its own. Here are some of them.

1. Simplicity: Term life insurance plans are straightforward. Unlike other insurance plans, this type of insurance is simple and easy to understand even for the layman. This makes it easier for the policy holder to make proper, timely premium payments.

1. Flexible: Opting out of a term life policy is much easier than getting out of other policies. In term policies if you stop paying premium the risk cover ceases, and the policy ends. Nothing is payable to you as there is no savings element in the policy.
2. Renewable: Many term life insurance policies are "renewable" and "convertible." Renewability ensures that you can go in for another term policy without a medical exam at the end of the first term policy. Convertibility allows you to convert your term life policy into an endowment policy for the same sum assured with associated increase in premium, should this make sense during the term of the policy.

4. Suitable for all: Term plans are insurance products in their purest form. In term insurance, all the insurers who pay premium are pooling their money, which can then benefit one or more insurer’s families in case of the insurer’s death. This form of life insurance is suitable for those who survive on a single breadwinner’s salary or those who function on a strict budget because the premium each insurer pays is minimal, while pay-out is quite significant.

5. Protects against liabilities: Term insurance is ideal for those who want to protect their families against short term liabilities like loan repayments, children’s education, business or wedding.

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