Policies are bought with the sole aim that they give coverage to your life and after. Since in term life policies there is no cash value and the beneficiaries get only the death benefit, these policies hold value if the insured person dies within the stipulated term only. The beneficiaries do not have the right to claim any amount against the policy once the policy period expires. The terms and conditions of these policies are simple and the premium is fixed according to the total insured amount. The rates of term policies are also quite low.
Uncertainty always involves in term policies. Such policies are considered pure insurance and term prices paid in them in the form of premiums are completely invested in insurance account rather than invested in saving which is the case with whole life or universal insurance. Nobody knows about one's time of death but still buys term policies by keeping the fact in mind that death may happen anytime. Buyer of term policy is made to understand about the rules through quotes about benefits and losses when policies are bought. Policy buyers must understand the fact and agree on term prices after knowing such facts.
There are various factors that are considered while determining the term insurance rates. They are mainly:
• Health factors
• Smoking status
• Drinking habits
• Undertake high risk activities like adventure sports.
• Family medical history
• Age
• Gender, etc
In today's scenario if one speaks of it does not apply to only life cover. Rather the policies are coupled with many other additional factors that make insurance a saving option also. To broadly categorize, policies are of two types:
• Term policies- this as stated refers to only life cover and death benefits.
• Whole policies- these policies act in a dual mode of life cover as well as saving and investment options.
The major difference in both the policies is their insurance rates. Term policies have lower rates as compared to whole life as they have cash value and the beneficiaries are entitled to both death benefits and the built-up cash value.
Although there is no concept of refund of premium in these policies but there are some that also have premium refund options. Term policies are purely risk protection options whereas universal or other types of whole are also bought for investment purpose. There are countless usages and benefits of policies. Financial security is one of the key factors. Some types of policies are bought for purely death benefit. They don't have any cash value hence they are pure form of.
On the other hands policies meant for investment and those taken for pension or old age benefit has enough scope for good financial gain at a time in life when there is no other source of income. policies are primary bought for life coverage and fulfilling financial responsibilities. Perhaps it is the key factor that every individual is augured to get them insured without delay. Major responsibilities of an individual are caring dependents, debts, bearing educational expenses of children, marriage, funeral costs and mortgages or old age security.
It is a great way to secure the future of your loved ones and while you are not with them, you at least will have provided for them. So whatever is the type of policy you should have one, no matter what your income is. You should take a policy the price of which is at least 15 times your annual expenses so that your family can be supported in a proper way. If you do not want to take risks then there are also provisions for guaranteed returns wherein a fixed cash benefit is assured irrespective of the market conditions and the status of your investments.
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