HomeLife Insurance5 Reasons Why You Must Buy Term Insurance Policy

5 Reasons Why You Must Buy Term Insurance Policy

Life is uncertain and no one knows what will happen in the future. If you are the only bread earner in the family then you need to make sure that the future of your family is secured because although you can’t control the future you can make sure that your family is financially safe in the future even if you are not there for them or even if life throws multiple uncertainties to you in the future.

The very old saying health is wealth is very true because, till the time you are healthy, you can protect your family without any trouble and in the case where you are the only bread earner in the family then things like leaving a net amount of money for your keeps on running in the mind and the safest way to make the future your family financially secure is by opting for a life insurance policy.

A life insurance policy ensures the person’s family with a sum assured on the death of the individual to make sure that the family doesn’t have to suffer any type of financial trouble when the sole earner of the family is no more. But what if you or your family faces financial trouble not because of an extreme situation like death but because of uncertainties?

In such situations, life insurance might not be helpful for you. On the other hand side, the term insurance policy covers you for a specific sum and specific tenure and if you have chosen a good term insurance policy then it will protect you from death, disease, and disability.

Top 5 Reasons Why Term Insurance is Important for You?

So let’s dig into some of the top reasons for choosing a term insurance policy and know what makes it better than other options.

1. Low Premium

There is no investment element involved in the term insurance policy and therefore you can opt for a term insurance policy at a very low premium. If you compare the premium of a term insurance policy with any other policy then you will find that the premium charged in the case of a term insurance policy is lower than all other insurance policies.  A person choosing term insurance will have to pay only 1% of his annual income and that’s quite economical. So, even if you have a low budget for your insurance policy you can easily fit a term insurance policy in it.

2. Easy and Simple

A term insurance policy is much easier to understand in comparison to other policies like an Endowment policy in which the risk cover is mixed with savings. All the plans that are composed of both risk cover and saving are known as cash value plans. While opting for such plans, it becomes quite difficult for the layperson to differentiate between the premium he is paying for the risk cover and the amount being invested for savings. That’s why financial planning with such complex plans becomes quite difficult for most people as they are not clear about their premiums and savings portion.

On the other hand, the term insurance policy is very easy to understand it works on a very simple model that says just pay the premium and get covered for the chosen term.

3. Brokerage Nullified

In most of the cases, the brokerage fee is mentioned in the premium allocation charges and it is a recurring expenditure.  Your every premium payment contains a certain portion of brokerage charges and it keeps on decreasing with time. Usually, the brokerage amount is 5-6% of your premium amount and you can’t opt out of paying this brokerage charge because it comes in-built with your premium. But if you buy the term insurance policy online, then you will not have to pay any type of brokerage and you will directly save that 5-6% of your premium amount.

Also Read: What Makes Term Insurance an Ultimate Choice?

4. Availability of Riders

Riders are additional benefits that come along with term plans to fulfill the specific needs of the policyholder. All the riders come at a nominal fee and they should only be added to your term insurance plan if you find them necessary for yourself. Critical illness, death due to accident, and partial or permanent disability are some of the most common riders that come along with your term insurance plan. But before buying a rider, you should always go through the offer document to know about the exclusions.

5. Competitive Pricing

Since term insurance policies are easy to understand most of the term insurance policies available in the market are similar to each other, you can easily compare different term insurance policies based on price. So much popularity of term insurance policy has made this specific sector of insurance highly competitive which is turning positive for the customers.

Term insurance policies are one of the best life insurance policies which is easy to understand and you don’t have to pay a high premium for it as well. So if you are looking for the safest insurance policy that can easily fit into your tight budget then nothing can beat the term insurance policy.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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