WHAT IS TERM INSURANCE
Term insurance is a simple plan which offers benefit only on the death of a insured person. The Main benefit of this plan benefits the family members of the Life insured. There is no benefit on the survival of the life insured on maturity. To sum up in 3 points, term insurance has three unique features:
- Low premium and higher Sum assured/Life coverage
- There is no maturity benefit
- Benefit of this plan cant be enjoyed by the life insured person.
Term insurance is the simplest and purest form of life insurance. This plan is the most important and the most wanted plan for all those who have dependents on their life. If you wish to secure your family and dependents financially then you have to look out for a term insurance plan immediately. This Term insurance plan gives you the maximum cover possible with the minimum possible premium.
Each and every life has a financial value. We had already learned in the previous section on how to calculate the Human Life value. After arriving at the Human life value, we can understand the optimal cover which we need to take to protect our family financially in case of unexpected events in the future.
To decide on the optimum coverage in term insurance you have to stick to the below thumb rule.
RETIREMENT AGE Minus CURRENT AGE Multiplied by ANNUAL INCOME
Example: if your age is 30 and you are planning to retire at 60. You have to multiply your annual income by 30. And for calculation purpose let us assume that your annual income is 500000, your optimal term insurance coverage will be Rs.15000000.
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