Life is uncertain. While we cannot completely control the different directions where life takes us, we can take a few steps to reduce any harmful consequences. Planning your finances in the right manner so that your loved ones are financially secure is one such vital step. Though you may be saving and investing your hard-earned money efficiently for the present, one cannot say what will happen in the future. Therefore, one must buy a term plan. There are several life insurance products providing financial protection to your loved ones in the event of your untimely passing away. Experts, however, suggest that a term plan is usually the best choice for those who are looking for a life cover. Here’s why.

What is a term plan? 

A term insurance plan, as compared to other life insurance products, provides coverage for a limited duration only. Hence, the name, term insurance. When you buy a term plan, you can choose to pay premiums in instalments over a long period of time, or you can choose to pay it in a lump sum. In return, you get life coverage for the duration. A term plan premium calculator can also help you get an idea of the premium so that you are prepared for the costs. If the policyholder passes away in a manner mentioned in the policy coverage, then the beneficiaries previously chosen by the policyholder are given the sum assured amount.

Why a term plan may be more beneficial than other life insurance policies

  • Term insurance plans are uncomplicated and simple

One of the major term insurance benefits that makes term plans popular across different age groups is that they offer a very uncomplicated approach to life insurance. Whether you are 22 years old or 45 years old, understanding and buying a term plan is a simple, easy process that one can manage by oneself. Other life insurance products, though more rewarding, may not be suitable for those who are looking for a simple policy to meet their life coverage needs.

Term plans are pure protection plans; they do not have a savings, or an investment element attached to them. For instance, a life insurance product such as a ULIP offers the investor the opportunity to invest in market-linked instruments. This means there is an element of risk involved along with your life policy. Plus, they may be complicated to understand for the average policyholder. This is in contrast to the simple, no-risk involved, life-cover only characteristic of term insurance.

  • Term plans are more affordable 

Affordability is one of the biggest benefits that term insurance offers. As compared to any other life insurance product, term insurance is relatively cost-effective. If you enter identical formation into a life insurance calculator and a term plan premium calculator, the latter will display a lower premium than the former. This is usually because of the shorter duration of coverage that a term plan offers.

If you choose to buy a term plan at a very young age, you get the advantage of even lower premiums and can reap term insurance benefits for a longer duration.

  • Term insurance offers short-term and long-term coverage

Most other life insurance products, such as whole life insurance, offer coverage for as long as the policyholder is alive, or sometimes up and until they turn 99 years of age. Term insurance, on the other hand, can be bought for a period of five years, ten years, twenty years, and so on. One can also buy a term plan for a period of 40-45 years. It is suitable for those who do not want to commit to a long-term plan and wish to have a life cover for specific events only.

For instance, you may wish to have a life cover for the duration of your daughter’s master’s degree. You may want to ensure that no matter what happens, there are enough funds to support her education and to run the household. A life insurance policy for such a short period may not be a wise choice. Term insurance with a tenure of five years, on the other hand, will not only help meet your objective but also incur very low premiums, saving you money in the long run.

Ultimately, the answer to whether term insurance is the right plan for you or not depends on your needs and goals. Review your requirements and read the terms and conditions of the policy before you buy a term plan.

Eve Nasir