Term insurance basics

Oct 18, 2016 | 2 years ago | Read Time: 1 minute | By iKnowledge Team

Term insurance is a type of life insurance policy wherein the nominee of the insured person  gets death benefit if any uncertainty (death) occurs before the end of the policy term.

How does it work?

  • This type of plan provides protection to your family in case of your death. The beneficiary receives a guaranteed amount i.e. sum assured in such an event.
  • Term life insurance products are usually available for a tenure of 10, 20 or 30 years.
  • The policy will be valid as long as you are paying the premium amount.

Benefits of term life insurance

  • Term life insurance is the cheapest policy you can purchase.
  • The premium of term life policy never goes up during the tenure of your policy irrespective of your health condition. This is subject to the life cover remaining constant during policy ternure.
  • Premium paid and the benefits received re exempted from income tax under the Section 80C & 10(10)D of Income Tax Act.

Who should buy term life insurance policy?

  • This policy is ideal for every bread-earner wishing to secure the future of their family
  • Ideal for people looking to buy affordable life protection policy.

Types of term insurance policies

  • Level term: This type provides the predetermined death benefit during the term of the policy.
  • Decreasing term: The death benefit in this type of policy decreases at a predetermined rate over the tenure of the policy. However, premium remains constant throughout.

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