Term Insurance Explained
When an insurance policy is purchased to give coverage for a predefined duration of time (term) , it is known as a Term Insurance Policy. For example in my case I took a home loan for 10 Lacs. To avoid the burden on the family in case of unforseen situation, I opted to take a term insurance plan with a coverage of 10 Lacs, thus by paying a low EMI of approximately INR 5500 each year, I have the security that in case of my death, my family will receive death benefit of 10L so that the home loan can be settled and thus no burden is incurred by the family.
One has the option to choose the period of cover and since term insurance only gives protection it has no value towards saving or investment and thus remains low cost option for providing security and benefits in case of death of policy holder.
Term Insurance can also have addon’s in the form of Dread Disease Rider, Personal Accident Benefit Rider etc. to increase coverage.
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