The death of any individual in a family can be a heart-wrenching incident. It seeps up the other members emotionally and is capable of sending down shock-waves. However, if the person happens to be the sole earner in the family, it also brings in the financial aspect. The loss of the sole earner in the family can not only be emotionally draining but can bring in potential financial turmoil as well. Not unless the person has a term life insurance.
While a term life insurance cannot bring back the person, it can surely aid as far as finances are concerned. Given the unpredictable nature of life, a term life insurance plan online can help you handle such situations. Individuals who are the earners of the family and want to ensure that their loved ones can continue with their lives normally must buy a term plan.
While there are lots of other ways to build up a wealthy future, none comes close to a term life insurance. It is an agreement between an insurer and a policy holder. The policy holder must pay a premium at regular intervals and the insurer will offer cover for life for the individual. Should anything unexpected take place and the policy holder loses his/her life, the policy will kick in.
There are a few factors that make a term life insurance worth every penny. Here are some of them.
- Term plans do not have any savings or investment component; thus, they are pure life insurance plans.
- Lack of such components helps the plan to keep their premium prices down even with huge life coverage cover.
- You can buy the policy both online and offline. Though buying them online call for better savings as far as premiums are concerned.
- With the help of a term plan, you can secure a cover worth 20 times of your annual income by paying only about 2-3% of your annual income as premiums.
- There are a host of riders to choose from, which can easily enhance the capabilities of your term plan.
However, they differ from standard insurance plans such as an endowment or annuity plans. When you purchase such plans, insurers offer you the ability to take a loan against the policy issued.
How to Buy a Loan in Term Life Insurance?
When you do set out to buy a term life insurance, compare them on Coverfox.com as there are different types of policies to choose from. For starters, there is a standard term plan. According to this, a policy holder will pay a pre-defined insurance premium for a specific number of years for a specified sum assured. The policy doesn’t have any maturity benefits or survival benefits. Only if the policy holder loses his/her life, there will be payouts to the nominees of the policy.
The next type of policy is the increasing term insurance. This is similar to a standard plan with slight modifications. With increasing age, your liabilities and responsibilities also increase. With an increasing term plan, the life cover also increases. By the end, the original cover can increase by 1.5 to 2 times of the initial cover.
Another variation of a term life insurance is the life stage event term plan. If you choose this plan, at the onset of certain life events, you have the option of increasing the cover of the policy. For an instance, when you get married, you can increase the cover of the policy by 50%. On the birth of your first and second child, you can again increase the cover by 25% each time. This way, you can stick to the same policy even if there are increasing needs.
However, irrespective of the different term life insurance types, you will not be able to procure a loan against them. None of the insurers offer you the option of buying a loan against a term plan. Though some insurers allow you to convert a term plan into a whole life insurance plan or an endowment plan. But you would not be able to secure a loan.
Eligibility to Buy a Loan in Term Life Insurance
To buy a term plan there usually are some basic eligibility criteria. For an instance, you must be at least 18 years old to be able to buy a term plan. Similarly, depending on your insurer and the plan you want to purchase, there is an upper age limit on buying a term life insurance. Since insurers do not offer loans on a term life insurance, there aren’t any eligibility criteria for the same.
Term insurance is a must have policy to protect your family. Though, it does not provide a loan facility, it is still a policy which will take care of all financial commitments if something were to happen to the policy holder.