Term plans have always received a vote in their favour from individuals who are looking to insure their lives at a lower cost. And with good reason. But with so many life insurance companies vying for a place in the individual’s insurance portfolio, the options merit evaluation. Here, we present a few pointers on how to assess a term plan given the various options available.
Simply put, a term plan is a pure risk cover plan without any maturity benefit. This is because only mortality charges and administration expenses are covered in the premium amount; there is no savings element here. Hence, only in case of an eventuality do the individual’s nominees stand to ‘benefit’ by way of receiving the sum assured.
It is called the intelligent person�s insurance cover. However, term plans are yet to make an impression in the minds of insurance seekers in India. Most of them would prefer expensive endowment polices because they would get �something at the end of it.� Never mind, they may be underinsured thanks to the costlier premium. Still, the cheapest and most effective insurance cover fails to enthuse most of them. �Most people just don�t get it. For them insurance is all about tax breaks and tax-free returns on maturity,� says an insurance advisor with Life Insurance Corporation of India. He says it is difficult to convince customers, as most of them do not like the idea of not getting any money at the end of the term or on maturity. Another reason why term plans remain out of public perception is due to the lower commission rate that insurance agents earn on them.
No comments:
Post a Comment