{"id":40140,"date":"2019-03-10T14:32:52","date_gmt":"2019-03-10T09:02:52","guid":{"rendered":"https:\/\/www.newsilike.in\/?p=40140"},"modified":"2019-06-06T12:16:52","modified_gmt":"2019-06-06T06:46:52","slug":"5-basic-terminologies-associated-with-term-insurance","status":"publish","type":"post","link":"https:\/\/www.newsilike.in\/5-basic-terminologies-associated-with-term-insurance\/","title":{"rendered":"5 Basic Terminologies Associated with Term Insurance"},"content":{"rendered":"

\"Term<\/a><\/p>\n

Life is full of uncertainties. The uncertainties can take the shape of illness, financial difficulty, permanent disability, or even death. Life insurance by way of a term insurance policy helps one to smoothly tide over these uncertainties by providing a definite sum assured and financial support for the bereaved family members. With limited earning members and lack of social security, the importance of a term insurance plan cannot be understated. We shall study the meaning and the terminologies associated with term insurance.<\/p>\n

To begin with, it is essential to understand what term insurance is. Term insurance<\/a><\/strong> is a risk cover against the death of the policyholder, with a fixed policy tenure. The insured pays the premium at a predetermined frequency to the insurance company throughout the term of the plan. In the unfortunate event when the insured dies during this time, the insurance company pays a guaranteed lump sum to the nominees. If one survives the policy term, the policy expires. It is a pure insurance product, with a lack of inbuilt investment features. The premium paid is allocated for the mortality charge. The amount of premium is determined by one\u2019s age at the time of purchase of the plan, the policy term, and the sum assured. We shall now look into the common terms used in term insurance.<\/p>\n

Basic terminologies related to term insurance<\/em><\/strong><\/h2>\n

Listed below are a few common terms that are associated with a term insurance policy<\/a><\/strong>.<\/p>\n

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  1. Sum assured<\/em><\/strong><\/li>\n<\/ol>\n

    The amount predetermined for the policyholder. It is disbursed to the nominee upon the demise of the insured.<\/p>\n

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    1. Entry age<\/em><\/strong><\/li>\n<\/ol>\n

      Any person falling in the age group of 18-65 years is eligible to purchase a term insurance policy.<\/p>\n

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      1. Maturity age<\/em><\/strong><\/li>\n<\/ol>\n

        Maturity age is the tenure after which the plan expires. This is dependent upon the policy term selected by the policyholder. Hence, considering the low mortality rate due to advancing healthcare, it is advisable to select a term insurance plan with an extended life cover up to the age of 80 years.<\/p>\n

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        1. Policy term<\/em><\/strong><\/li>\n<\/ol>\n

          It is the tenure during which the policy is in force and the life cover will be provided to the policyholder. For example, if a person of age 35 years wants to buy a term plan with the maturity age of 80, his policy term will be of 45 years. It is recommended to seek the longest period to avail of the best life plan.<\/p>\n

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          1. Riders<\/em><\/strong><\/li>\n<\/ol>\n

            A rider is customization of the plan with an additional feature to one\u2019s existing policy. \u00a0The inclusion of riders enables better risk cover at a nominal charge. It may be allowed at the inception of the policy or can be added on later. There are various types of riders offered by insurance companies. Some of them are:<\/p>\n