Term Plan - Life insurance product, Principles of Insurance Video Lecture | Principles of Insurance - B Com

Ans. A term plan in life insurance is a type of insurance product that provides coverage for a specified term or period of time. It offers a death benefit to the nominee or beneficiary in case the insured person passes away during the term of the policy. Unlike other types of life insurance, a term plan does not have a savings or investment component and only provides pure life cover.

Ans. A term plan works by providing financial protection to the insured person's family or dependents in case of their untimely demise. The policyholder pays regular premiums for the chosen term, and in return, the insurance company provides a death benefit to the nominee if the insured person dies during the term. If the insured survives the term, there is no maturity or survival benefit. It is important to pay the premiums on time to keep the policy active and ensure the coverage remains in force.

Ans. Some of the benefits of a term plan include: - Affordable premiums: Term plans generally have lower premiums compared to other types of life insurance policies, making them more accessible for individuals seeking high coverage at a lower cost. - Flexibility: Term plans offer flexibility in choosing the policy term and coverage amount according to the policyholder's needs and financial goals. - Financial protection: A term plan provides financial security to the insured person's family or dependents in the event of their death, ensuring they can maintain their lifestyle and meet their financial obligations. - Tax benefits: Premiums paid towards a term plan are eligible for tax benefits under Section 80C of the Income Tax Act, 1961. The death benefit received by the nominee is also tax-free under Section 10(10D) of the Act.

Ans. Yes, term plans often offer customization options to suit individual needs. You can choose the policy term, coverage amount, and premium payment frequency based on your financial goals and requirements. Some insurance companies also provide additional riders or add-ons that can be attached to the base term plan for enhanced coverage. These riders may include critical illness cover, accidental death benefit, waiver of premium, etc. It is advisable to carefully evaluate the customization options offered by different insurance providers before making a decision.

Ans. If you stop paying the premiums for a term plan, the policy may lapse or become inactive. As a result, the coverage provided by the policy will cease, and your family or dependents will not receive any death benefit in case of your demise. However, some insurance companies offer a grace period after the premium due date during which you can make the payment and prevent the policy from lapsing. It is essential to keep the policy active by paying the premiums on time to ensure continuous coverage.