Term Life Insurance- A Cost-Effective Alternative

Every person wants to ensure that he and his family is financially secure. Living comfortably is very important, even in the time of crisis. To have a sense of security one needs to purchase a life insurance plan.

Which life insurance plan should one go for?

This is a vital question. There are two types of insurance plans available. One can go for a permanent plan if one needs to secure his life till death. If a person wants to get secured for a short period of time, then he must go for a temporary plan. Term life insurance is one such temporary plan that gives the insured maximum profit in a short period of time.

Permanent Insurance and a Term life insurance Plan – A person purchases a permanent insurance plan when he wants to get life time insurance. This plan would mature only when the insured person dies. Therefore, the premium that needs to be paid every year is also more in case of the permanent plans.

On the other hand, even the best term life insurance does not cover the insured till death. It might so happen that the insured dies within his term. In this case, the entire amount will be paid to the beneficiary. If the insured dies one day after the policy ends and is not renewed, then he gets no money. This is the risk factor involved in such temporary plans. But, one must not overlook the advantages of such a plan. In a term life insurance, one needs to pay much lower premiums compared to the premiums paid in the permanent policies. The insured person can renew the policy at the end, if he feels the need for it.

In a nutshell, the use of a life insurance program depends from person to person. It varies with the need and priority of every individual. Therefore, one needs to think and plan his requirements before purchasing any insurance program.

What are the types of term life insurance plans available?

The insurance company offers a wide range of term life insurance plans. The five types of term life insurance plans available are:

•    Annual renewable term insurance plan- In this plan the coverage is automatically renewed at the end of each year.  The premium amounts keep increasing every time the policy gets renewed.

•    Renewable term insurance plan- In contrast with the annual renewable term insurance, this coverage gets automatically renewed at the end of each term (5 to 20 years).

•    Level premium term insurance plan- The premium paid at the end of each term is constant in this plan. Therefore, if a person purchases this plan in his early days, he will be benefited in the later days of the policy.

•    Decreasing term insurance plan- Unlike the above three plans, the cash benefits keep decreasing every year in the decreasing term insurance plan.

•    Convertible term insurance plan- According to this plan, the insured person can convert his present term insurance policy into any of policy. As the risk involved is more, this plan is bit costly.

Select the most suitable plan and get a secure future!

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