what are Term Insurance Policies

Posted by Admin on 3

Term Insurance is insurance in very pure form.
It is pure form of insurance because in such policies premium rate are very low, and on maturity no amount is paid. Because of the feature of no premium return at the end of term many people do not prefer term insurance but they overlook the low premium for which they are getting high risk cover.

In Term Insurance policies
Person needs to pay premium until fixed term.
1) If person dies during the term of the policy.
Nominee of the person receives the insured amount.
Policy gets terminated.
2) If person survives till Maturity.
No maturity amount will be paid.
Policy gets terminated.

For a healthy person of 30 year, and 25 years term
A typical term Insurance, Endowment and Money Back policy premium rates are given below.

Sum Assured: 10, 00000
Term Insurance: Rs. 3821.
Endowment: Rs. 38820
Money Back: Rs. 52,740

As in term insurance plans, life risk is covered with minimal premium, depending upon the health, age, sex, occupation, of the person, insurance company ask for the medical examination and these rules are strict as compared to other policies.

If you need insurance for a large amount and you feel Endowment and Money Back plans too costly then Term Insurance is for you. Many people prefer to keep insurance and investment different for them term insurance is an ideal policy.

Advantage:

  • High risk cover and low premium.
  • Tax benefit on premium paid.

Disadvantage:

  • No maturity amount.

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3 comments:

ManiG said...

Does the premium mentioned is current price.. or its increased?

Bhargav said...

Hi,

your Question is not clear so i assume u want to understand if the premium increases or not.

The premium remain same throughout the term

Anonymous said...

Hi...It is really sad part of our investor...they don't take care about investment and insurance strategy.I have come to know by different blog about the fact that one should not mix insurance with investment.
Thanks for guidance
pallav

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