FAQ Session: Answering 6 Most Commonly Asked Questions Regarding Term Insurance
When you’re looking to invest in life insurance, you may find yourself a little overwhelmed. There are lots of terms that you may want explained and questions you may want to ask. Most term insurance plans are more affordable and offer peace of mind while still allowing for flexibility. Here are some answers that can help you with your insurance decision.
1. What is the difference between online and offline insurance plans?
An online term plan differs from an offline plan in their premium rates. The features and benefits are nearly identical. What’s more appealing about online plans is that they don’t require any extra parties. This means that you can purchase directly, which makes them less expensive.
2. How is term insurance different from permanent insurance?
Term insurance tends to have lower premiums than permanent life insurance. Another big differentiator is the fact that term insurance has a set time frame. They can vary from a few years to 20 years, and typically there is no payout if there is no death within the term. Term plans can sometimes come with a loan, so that if the insured dies within the term, debts like mortgages and loans will not be passed on to the policy holder’s family. Permanent life insurance does not have an end date.
3. Who should be my beneficiary?
Your beneficiary can be anyone of your choosing. Choose carefully, keeping in mind what will be best for your family and your situation. You may need to choose multiple beneficiaries. It should be noted that it is possible to change beneficiaries if you need to.
4. Are there different term plans?
There are different term plans available in the market. The pay out of level term plans stays the same throughout the plan tenure. The return of premium plans give you back your paid premiums when your term plan matures. Increasing benefit plans are attractive because their benefits amount grows during the term while your premium remains the same. In decreasing term plans or mortgage redemption plans the end payout reduces over time and is usually taken with a loan.
5. What about income tax benefits?
There are income tax benefits with term plans just as there are with permanent insurance plans. You can get tax relief up to a limit of Rs.1.5 lakhs on the premium that you pay. Even claims received in your policy would be tax free.
6. What makes term insurance so great?
Life insurance gives you some solace in knowing that your family will be taken care of in the event of your death. Term insurance is preferred by many because it is a bit more flexible. The premiums tend to be cheaper than permanent insurance premiums. If you choose a return premium plan, you can take your return and put it into another plan if you like.
Preparing for the future doesn’t have to be stressful when you know what you’re looking for and how the different types of insurance operate. Asking a few questions can make a big difference in your understanding and help you to make an informed choice that will benefit both you