Term life insurance is the type of insurance that gives you cover for a specified period. This specified period is known as the term of the policy. It may last for a period of 20 to 30 years. If you die during the term of the policy, the sum assured will be paid out in a lump-sum manner to the beneficiaries or nominees of the policy. These policies take care of the financial security of your dependents.
The factors that affect your term insurance premiums include your age, medical condition or general health, how long do you want the cover for, the level of cover you need and whether you smoke.
Term insurance can be taken out in a single name or jointly by spouses. Joint policies will cover your better half and children, should one of you die.
There are four kinds of term insurance policies:
a) Increasing Term Life Insurance
The cover in this type of insurance keeps increasing with time. However, it is not just the cover but also premiums that will go up, as the policy is designed to beat the impact of inflation.
b) Decreasing Term Life Insurance
The coverage in this keeps decreasing over the life of the policy at a predetermined rate. The insured has to pay premiums throughout the term of the contract, while the coverage keeps reducing monthly or annually.
c) Level Term Life Insurance
Under this policy, the cover will remain the same, no matter when the claim is made. However, as the cover does not mitigate inflation effects, the same amount may become worthless in a longer duration.
d) Family Income Benefit
This type of policy is to provide financial security to your dependents regularly. Instead of lump-sum payments, this policy pays out regularly, if you die.
Term life insurance pays out only in the eventuality of the death of the insured. Should you outlive the policy term, there is no payout and the premium paid remains with the insurance company.
We would recommend you to talk to one of our advisers for life insurance quotes.
Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!
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