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Insurance & Life: Term Insurance

, August 13, 2021, 0 Comments

What is Term Insurance? In this policy, there are no maturity benefits. In simple words, you will not get anything back at the end of the policy. But if you die during the term of the policy, your nominee will get the policy amount immediately.

If you are 35, the annual premium for a 1.5 Crore policy will be around 17,000. If you pay this premium every year from 35 to age 60, your family is sure about the payment of 1.5 Crore in case of your death. But if you live upto age 60, nothing is payable from this policy. You will be losing the premium of 4.25 Lakhs paid during these 25 years!

This is the only way to ensure adequate life insurance for a person. The amount of 17,000 per year (around 1400 per month) is to be considered as the price you are paying for the peace of mind you are getting in ensuring a decent living for your spouse and kids in your absence. After all, this 1400 is just the cost of a weekly outing.

So please purchase a high value term policy, if you love your family.

The premium quoted above is for an online term policy, which you have to purchase online. If you purchase it through agents the premium will be higher.

Why term policies are not popular in India?

We feel that we are losing the premium in term policy because there is no maturity benefit. But see the large benefit in case of death of the bread winner! This is the only way to ensure a decent life insurance cover for a person at an affordable premium. If you really love your family, purchase a term policy of decent value when you are alive and healthy. The main reasons for the low popularity of term policies are

1. Agents are not interested in selling this policy because of the low premium and the resultant low commission.
2. Low awareness about the real benefit of term policy
3. Feeling that you are not getting anything on maturity and losing the premium paid
4. Emotional issues like wife saying – I don’t want any amount because of the death of my husband.

If every wife knows what a widow feels, no husband will remain uninsured.

It is high time that you should purchase a term policy and ensure all earning members in the extended family and friends circle are insured for a decent amount. In fact government can think of making it mandatory as a social security measure so that no family will suffer in case of death of the breadwinner.