Thursday, 3 January 2013

In permanent life insurance

Term life insurance or term assurance is a form of life insurance providing coverage at a fixed rate of payments for a limited period of time. On the expiry of the policy, the policy owner is left with the choice to renew the term life insurance policy or to let the coverage end. This type of insurance policy is in sharp contrast to permanent life insurance. In permanent life insurance, duration extends until the policy owner reaches 100 years of age. However, the policy does not provide any returns beyond the stated benefit, unlike permanent policies, which have a savings component that can be used for wealth accumulation. The fact is that it is the least expensive way to purchase a substantial death benefit on a coverage amount per premium over a specific period of time. The point is that after the stipulated period, coverage at the previous rate of premiums is no longer guaranteed. After the expiry of the period, in case, if the insured dies during the term, the death benefit will be paid to the beneficiary. The subject policy is generally associated with pure income replacement needs for an individual. It functions in such a way that it satisfies claims against what is insured if the premiums are up to date and the contract has not expired. In fact, it does not provide for a return of premium if no claims are filed. The plans are simple to understand and give you the choice to choose your plan, inclusions, premiums and payment frequency. The subject insurances gives you tax benefits under section 80 (C). Many term insurance plans are easily available online. The simplest form of it is for a term of one year and the company will provide death benefit to the beneficiary if the insured died during the one year term.It is also known as a pure risk cover plan for it helps you reduce the financial problems associated with any life risk arising to you. Side by side mitigating the risk, it helps your loved ones to overcome that financial trauma on account of a particular risk. A version of term insurance which is commonly purchased is annual renewable term (ART). Here, the premium is paid for one year of coverage. The policy is guaranteed to be able to be continued each year for a given period of years varying from 10 to 30 years and occasionally until age of 95. The rate of the premium goes on increasing with each renewal period. It eventually becomes financially viable as the rates for a policy would eventually exceed the cost of a permanent policy. The documents needed for taking a term life insurance policy are; Age Proof, Identity Proof, Address Proof, Income Proof, Duly Filled Proposal Form, and Some plans may require you to undergo Medical Tests.