When you are looking at buying a term plan the primary objective is towards giving financial security to your dependents when you are not there. Death is something which can’t ever be denied though can be delayed. The emotional loss associated with it which affects your family and relatives is aggravated by the financial loss. You as the single bread earner in the family this emotional loss can plunge your family deep financial crises also. All your financial plans can go out of track.
Looking at the whole list of life insurance plans offered by insurance providers there are specific plans which may be suitable for meeting specific requirements. Considering the whole list term plans seems to be the most apt in term providing the best security at a least cost. The basic premise of the plan is very simple , you pay a simple cost as a premium and you get covered for certain specific time period and in case our demise your nominee or nominees receive the sum assured.
Looking at the basic premise of term insurance Plans you should keep in mind that it is expenditure and not an investment. Other than the basic standard cover it doesn’t have additional benefits and has no surrender value. What it means is that if the policyholder is alive the nominee doesn’t get anything but this doesn’t mean that it’s not worth investing into a term plan. The whole idea of investing into a term plan is to give your family a sense of security and peace of mind when you are not there. Other than this term plan comes with advantage of easy opt in and opt out option compared cash value life insurance plan. The day you stop paying the premium cost your policy terminates but in case of cash value plans where you pay much higher premium compared to term plans for the same amount of cover with a guaranteed surrender value, the insurance company deducts huge money from your investment amount before they return you the surrender value which may sustainability affect your savings objectives.
The easy opt in and opt plans becomes very helpful when you are in a state of financial contingency. A state when paying premium become tough for you here the term plan become more effective for you whereas in of cash value life insurance plans you have to mandatorily pay the premium otherwise the money invested in the past becomes a total loss. Since the term plans don’t have any savings component so the premium is always very low compared to other plans. Though you can claims for tax exemptions on the premium that you pay towards a term plan but since there is no surrender value associated you are not eligible for any tax deduction.
Term plans do come with different options which may be much helpful. There are renewable and convertible term plans. The first option offers easy renewability opportunities without any medical examination which otherwise may increase the cost of premium whereas in the second option provides you with an opportunity to convert it into an endowment plan by paying an extra premium. This option in this way also gives you an option to insure you future cash flow. But one thing that one should keep in mind that term plans are not meant for financial goals like planning for your child’s future or buying your house and they should be always looked for protecting your family from financial emergency when you are not.
Now the question which might come to your mind is that is there any right age to buy a term plan. Definitely like all other life insurance plans the early you plan for it the more savings that you can make but you should always keep in mind the term insurance planning is to be done keeping in perspective of your financial responsibility towards your depends. May when your children are very young at age you financial liability is also the highest or you have huge loan to pay back to your home loan company, in stages like this the buying a term cover is always advisable. But looking at an old age when your children are already earning and they are not dependent on you for financial security investing in a term plan can be a waste of money. In fact at that age you might have always have right savings with you to support where cash value plan with lower cover high savings value can be most suitable option.
All the questions discussed above are diverse and should be answered as your specific requirements to build the right financial plan so it is always advised to compare Term Insurance plans online from different insurers before you buy one.