People usually invest primarily to fulfil life goals, beat inflation, and secure their family’s financial future. Regarding the latter, purchasing assets is not the only solution.

You should have an investment that can provide financial coverage to your loved ones in your absence. Purchasing a term insurance plan can be an ideal solution in this regard.

Are you wondering why term insurance is a smart investment?

Keep reading to find out!

Term insurance is a type of life insurance policy that enables you to provide financial coverage to your loved ones in your absence. It provides a death benefit to your nominees in case of your unfortunate demise during the policy tenure, ensuring they can cover their expenses without having to look for an immediate alternative income source.

Also, you can choose a payout option based on their income needs and opt for riders like critical illness riders, accidental death benefits, waiver of premium in case of disability, etc., that provide coverage for circumstances not covered under the base plan.

1. Level Term Plans

2. Increasing Term Plans

Increasing term plans allow the holder to increase the sum assured at a predetermined rate at specific life milestones within the policy period. The increasing life coverage helps ensure that the nominees have enough funds to cover their expenses in the future, even with the effects of inflation.

However, such plans usually have higher premiums than level term policies.

3. Decreasing Term Plans

As the name suggests, decreasing term plans offer a reduced sum assured at a predetermined rate, with an increase in the holder’s age. Such policies function on the principle that as the individual’s age increases, their financial liabilities tend to decline, thus requiring a lower sum assured.

These plans are ideal for people who have an outstanding loan or mortgage that they expect to pay off soon.

4. Return of Premium Plans

5. Convertible Term Plans

Such plans enable the holder to convert their current policy to another type of insurance plan later. It benefits individuals who expect their financial liabilities to change in the upcoming years.

For example, an individual with a convertible term plan can convert it into a whole life plan to get coverage for their entire lifetime.

Here are some essential pointers you must keep in mind when purchasing term insurance:

• Choose a policy duration and premium payment tenure based on your financial goals. 
• Ensure that you opt for an adequate sum, taking into account inflation and your family’s future financial needs.
• Opt for riders that match your coverage requirements.
• Go for a premium payment frequency that allows you to make timely payments without straining your finances.
• Select a payout option based on your family’s income needs.
• Check the insurer’s claim settlement ratio and reputation before purchasing the policy.