Why Are Term Insurance Policies Called Pure Risk Protection Plans?
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Purchasing term insurance is one of the best selfless acts you can do for your loved ones. This insurance cover offers financial security to your family even after your demise. It is a type of safety measure you take not for yourself but for the ones close to you. Though we avoid thinking about death, we all want to build a robust armour for the ones we leave behind. And a term insurance policy helps you do that! Hence, term insurance policies are also known as pure risk protection. It doesn't have a maturity benefit but a death benefit. Additionally, it involves minimal investment.
How Does Term Insurance Provide Pure Risk Protection?
While there are multiple types of insurance plans in the market, a term plan is the only policy that offers absolute risk protection. The idea behind this insurance cover is to provide financial security to the family after your sudden demise. In case of untimely death, the insurance company will offer a death benefit to the nominee or beneficiary. However, you must note that this benefit comes in handy only if you die during the policy period. Since term insurance offers a death benefit, it is neither an investment nor an expense. The premium paid towards this policy covers only an event of death.
Pure Term Plan Benefits
Let's uncover the key pure term insurance benefits:
- Pure Risk Coverage
- Term insurance plans provide pure risk coverage, which means it offers protection only at the time of death.
Affordable Premiums
Term insurance covers come at low premium rates, hence it is an affordable way of securing your family financially. An average term plan demands ₹2,000-3,000 as a premium per year.
Easy to Understand
Unlike other insurance plans, term insurance is straightforward and manageable. It doesn't revolve around concepts like investments or savings, and thus anyone with minimal understanding of insurance can compare various plans and buy term plans.
Easy to Cancel
If you want to cancel your term policy, all you need to do is stop paying premiums. However, you must note that you won't get any money back, not even the previously paid premium amount or a percentage of your sum assured.
Ideal for Sole Breadwinners
If you are the sole income earner of your house, this plan is essential for you. It ensures that your family is financially secure even when you're no longer around. Your dependents can also utilise the death benefit for loan repayment, education expenses, recurring household expenses, and more.
Riders Offered Under Term Insurance Policy
You can strengthen the benefits of a term insurance plan using the following add-ons:
- Accelerated death benefit rider
- Accidental death benefit rider
- Accidental disability benefit rider
- Critical illness benefit rider
- Waiver of premium rider
- Income benefit rider
Conclusion
Now that you know the pure term plan benefits and riders, it must be easier for you to compare various plans and buy a policy for yourself.
Also read- Here Are Some Frequently Asked Questions About Life Insurance Riders.
What Is The Best Way To Pick The Right Term Insurance Rider?
