Jayant, a 28 year old salesman in an FMCG company got married at the age of 25 years. Just after 1 year of marriage, he was blessed with a kid, which filled the unknown gap in his life. Even with a low income, Jayant always tried to fulfill all the expectations of his family in the best way possible. The happiness of his wife and kid meant everything for him.
But one day while returning from the market, Jayant witnessed an accident between a bike and a car in which the person on the bike who was almost 46 years old, died on the spot. This incident shocked Jayant and forced him to think what will happen to his family if such unfortunate event will happen with him.
Jayant was aware about life insurance policies and how it could save his family from such unfortunate event, but the financial limitations were stopping him from buying a life insurance policy. He went home and searched for an economical life insurance policy on the internet and just in a minute he got what he was searching for, a term insurance policy.
What Jayant Understood About Term Insurance Policy?
After searching on the internet Jayant realized that a term insurance policy is a traditional life insurance plan which provides financial protection for the family of the policyholder in case of death of the policyholder during the policy term. He understood that the policy gives a sum assured in the form of death benefit to the family of the policyholder in case of death.
He also came to know that a term insurance policy offers the flexibility of choosing his term, according to his need and requirement, but the main feature which attracted Jayant towards term insurance was its price. He found the premium amount of term insurance policy is very low in comparison to other plans and also the cover or sum insured given at such price is very high.
Why Premium Amount in Term Insurance is so Low?
But Jayant was very much curious about the reason for such a low premium price and he searched for the same and got a reasonable answer through a blog. The answer which he got was as follows:-
“A regular life insurance plan gives cover for death and maturity benefit also. So the liability of the insurer towards the insured increases and thus for a widened liability, insurer charge high rate of premium. While in a term insurance plan, the liability of the insurer is limited to only the death of the policyholder and thus with less liability, the premium amount charged in a term insurance plan is also very less”
What Factors Jayant kept in Mind for Choosing Best Term Plan?
For choosing the best term plan from the available options, Jayant kept the following factors in mind:-
- Trustworthiness and reliability of the insurance company
- Claim settlement ratio of the company
- How much cover does he needs
- Inflation factor in paying premium and coverage amount
- Comparison of various term insurance policies
- Online term insurance policy is much cheaper than buying through an agent
- Going through the brochure of the policy and understanding every terminology in detail
What Benefits Jayant got from Term Insurance Policy Bought?
An Economical Insurance Policy
Jayant was not buying a life insurance policy due to his financial limitations, but a term insurance policy allowed him to get insured under a life insurance policy at an affordable price. Since the premium amount was very low, he was not worried about the future premium which he has to pay during the policy term.
The various flexibilities in the term insurance plan allowed Jayant to customize his chosen plan according to his needs. He was able to choose his policy term, according to his need. He was also very much happy with other flexibilities of a term insurance policy like converting his term insurance policy into a whole life plan, an easy opt out and increasing the cover amount at crucial stages of his life.
Premium According to Age
Jayant got the benefit from one of the main features of term insurance policy which is “premium amount according to age”. The premium amount in a term insurance policy is set according to the age of the buyer because higher the age of the buyer, higher will be he risk associated with his life. So by buying a term insurance policy at an age of 28 years he was able to save on the premium amount in comparison to what he had to pay at an advanced age.
Jayant, also got the tax benefit for the premiums he paid under section 80C of the Income Tax act, 1961.
What Jayant Made us Realize?
With a wise and well informed decision, Jayant was able to provide financial security for his family at an affordable price. He was the only breadwinner of the family and that’s why having a secured future for his family was necessary. Just after realizing the unpredictability of life, without any delay, Jayant chose the best term insurance plan by doing proper research and analysis.
So if you also have some financial limitations like Jayant, then choosing a term insurance plan is the best decision because a term plan costs only a cup of tea and that’s why it is the most economical of buying a life insurance policy. But don’t forget to compare different policies and analyze your need before buying a term insurance policy, so that you can choose the best term insurance policy as Jayant did.