Term Plan Adjustments: What does it mean and how does it work?
In the grand scheme of events, most of you would have prioritized leading a comfortable life and ensuring that your family is safeguarded in case of any unforeseen event. One of the first steps needed to achieve this goal is financial planning. To ensure stable and steady growth of your wealth, financial experts advise you to invest in various financial assets. One such asset that not only provides you with an enhanced return but also provides financial security to your family, in case of your untimely death, is term insurance. Read ahead to know more about offline andonline term insurance plans and the importance of term plan adjustments.
What is a Term Plan?
A term plan is a form of insurance policy that provides coverage for a pre-decided number of years. Like other life insurance policies, term insurance also provides the required financial support to your family in your absence. It does this by providing a guaranteed monetary sum called a ‘death benefit’ to your family members (called beneficiaries) on your unfortunate demise.
You can buy a term insurance plan based on your requirements and financial capacity. However, to help you calculate how much term insurance coverage you need, many insurance companies let you use their online term plan premium calculator, which also helps you navigate the various term plan options available.
Once you have decided on a term plan coverage amount, your beneficiaries)receive the death benefit from the insurance company in case of your demise. Receiving this benefit is, however, only possible if the policyholder dies during the tenure of the term insurance plan and not after its expiry/ maturity.
However, there are some term plans that provide a monetary benefit, called a maturity benefit, to the policyholder in case he/ she survive the tenure of the plan.You can look into investing in a term plan with maturity benefit.
The minimum duration of a term planis 5 years, and the maximum duration can go up to the policyholder’s lifetime. However, most term plans are bought up to the age of retirement. While choosing a term plan, it is important to get one that is flexible and allows you to make adjustments as per the changes in your life. That way, you can modify your term plan and make additions to youronline term plan premiumto suit your changing needs. Moreover, you should opt for an online term insurance plan as buying online gets you discounts in premiums.
What are term plan adjustments?
As a policyholder, you should have the freedom to customize and make necessary changes to your term plan based on the requirements of your current situation and future life milestones. The changes you can make to the term plan coverage are called term plan adjustments and includechanging the mode or frequency of the premium payments, the tenure of the insurance policy, and the death benefit payout options.That is why, while purchasing a term plan, you must pay attention to buy one that gives you this flexibility.
How do term plan adjustments work?
Term plan adjustments vary from one insurance company to another, but in general, allow you tomake adjustmentssuch as:
● Changing the frequency of premium payment: One of the most basic ways in which you can adjust your term plan is by changing the frequency of your premium payments. Instead of making regular monthly payments to the insurance company, you can choose to pay the entire amount in one go or choose to make quarterly, half-yearly or annual, payments.
● Increasing the insurance coverage amount: Making changes to your insurance coverage is another way to make adjustments to your term plan. As per your varying needs, you can either increase or decrease the coverage you have. If you choose to increase the insurance coverage, you may have to pay a higher premium amount, and similarly, if you choose to reduce the insurance coverage, you might have to pay a lesser premium.
● Enhancingyour insurance coverage using riders: Riders are an innovative way to enhance your term plan and receive that added layer of financial protection against unforeseen circumstances that may otherwise not be covered in your base term insurance plan. One of the main reasons for their popularity is that they can be hand-picked as per your requirements and do not cost you a lot. You can choose to enhance your insurance coverage by selecting riders such as the critical illness rider, the accidentaldeath and permanent disability rider, the waiver of premium payment rider, and more.
● Revision of policy duration: Traditionally, term insurance plans are bought up to the policyholder’s retirement age. But you can always choose to revise the policy duration as you seem fit and decide to extend it by a few years or up to your lifetime.
● Choice of death benefit payout: Upon your demise, your beneficiariesreceive the death benefit, i.e., the pre-fixed insurance amount. You can choose how the death benefit payout would be handed out to your beneficiary. It could be in the way of a lump sum amount, a monthly payout or a combination of the two.
● Inclusion of spouse as a policyholder: Finally, you can evolve your term plan into a family term insurance plan by adding your spouse as a co-policyholder. This will provide your family with an added layer of financial security in case of a mishap to either one of you.
How to buy the right term plan?
There are many factors to take into consideration before locking down on a term insurance plan. One of the main factors is paying good attention to the reliability of the insurance company before purchasing the term plan. A sound way to do this is to check the insurer’s claim settlement ratio – that is the number of claims settled by it in a year and the range of insurance plans offered. The ZindagiPlus term insurance plan by Edelweiss Tokio Life Insuranceis one such term plan that provides holistic benefits to its policyholders. It even provides coverage against the COVID 19 pandemic.
Having the liberty to make adjustments to your term insurance plan as per your needs is anessential feature you should look for.The Edelweiss TokioLife Insurance term plan – Zindagi Plus, an offline and online term insurance plan, ensures you have the power to adapt your plan at various stages of your lifeand have the freedom to make amends.