Here we simplify term plans, explain how they can act as bodyguards for your family and decode some related jargon for you
21-Dec-2022 •Maushami Singh
Imagine an umbrella. It shields you from the downpour as well as the burning sun rays.
Similarly, life insurance can act as an umbrella. It offers financial protection to families and loved ones going through a tough time.
What life insurance does is...
In case of an unfortunate death of the insured (person covered under the life insurance policy) during the policy tenure, death benefits are paid out by the insurer to the nominee. However, if the insured outlives the policy tenure, then survival/maturity benefits are paid out by the insurer.
But when compared to term plans, such traditional life insurance policies (that offer survival/maturity benefit) have high premiums and do not provide adequate life cover often.
What are term plans?
Pure risk term plan, or simply term plan, is a type of life insurance without survival/maturity benefits. They come with cheaper premiums. If the insured outlives or lives past the term life insurance, the coverage ends.
Term insurance can be understood through a scenario where you hired a bodyguard and paying a certain amount to him to take care of your loved ones when you are not around anymore (only during the given period of time you hired him for), and once the duration of his service is over, he goes back to his company. The premium paid is the salary he got during the policy term. The duration throughout which the bodyguard stays may differ based on what you choose.
Now let us learn a few terms related to term insurance plans. Here, term Insurance is personified as the bodyguard.
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