What is Term Insurance
Term insurance is a life insurance plan which, for a fixed period of time, provides financial coverage to the policyholder. The death benefit shall be paid by the company to the beneficiary in the event of the death of the insured person during the policy period.
Term insurance is the simplest and purest form of life insurance. It provides financial protection to your family at the most affordable rates. With term insurance, you can get a large amount of life cover (i.e. sum assured) at a relatively low premium rate. The benefit amount is paid out to the nominee in case of death of the person insured during the term of the policy.
Term insurance is a form of life insurance policy that offers coverage for a certain amount of time or a fixed "term" of years. A death benefit shall be paid if the insured dies within the time stated in the policy and the policy is active or in effect. Term insurance has no cash value, unlike most forms of permanent insurance. In other words, the assured death gain from the policy is the only value.
The premiums are fixed and paid for the length of the term. If the policyholder dies prior to the expiration of the policy, the insurance company will pay out the face value of the policy. If the term expires and the individual dies afterward, there would be no coverage or payout.
Term plans provide pure life cover. This means there is no savings / profits component. They are basic plans which make life insurance more affordable vis-à-vis other options. It is possible for the policyholder to opt for a larger life cover at a lower premium when compared to a similar endowment plan.