FAQs 175 views November 22, 2018

Most people are apprehensive of buying term insurance as there are no death benefits if the policyholder outlives the policy period. However, policyholders do not realize that the effect of term insurance is to ensure financial security in their absence. The amount received as death benefits by the insured can help pay off any remaining liabilities like home loans or other debts, expenditure on children’s education and other daily expenses. Considering that there are no survival benefits associated with term insurance plans, it is essential to opt for a larger policy period. However, while choosing the right policy period, it is important to understand if your nominee(s) would continue to depend on you after you turn 70 years old. Term insurance must not be looked upon as an investment opportunity that would generate returns over a longer period, but as a financial cover that would keep your loved ones in the event of your sudden and untimely death.

However, if you still wish to opt for a plan that generates benefits for your nominee(s) irrespective of how long you live, you may consider paying for either Term Insurance Return of Premium Plans (TROP) or Whole life insurance policy.

In the former, the insurer offers a premium refund on maturity whereas, in the latter, the nominee(s) gets the sum assured as determined while buying the policy. However, it must be noted that the premiums charged on whole life insurance policies are much higher than level term policies.