Term Assurance is life insurance in it’s simplest form.
The sum assured under the policy is only paid out if death occurs within a specified term.
If the life assured survives until the end of the term, the policy will expire and there will be no monies payable.
1. Death Benefit: The primary purpose of a term life insurance policy is to provide a death benefit to the beneficiaries of the insured person in case the insured person passes away during the specified term. If the insured person dies within the term, a lump-sum payout, known as the death benefit or sum assured, is given to the beneficiaries named in the policy.
2. No Cash Value: Unlike some other types of life insurance, such as whole life or universal life insurance, term life insurance does not build up a cash value over time. This means that if the insured person survives the term, there is no payout, and the policy simply expires without any value.
3. Affordability: Term Assurance is generally more affordable compared to permanent life insurance policies because it focuses solely on providing a death benefit for a specific period. Permanent life insurance policies usually include an investment or savings component, which makes them more expensive.
4. Flexible Terms: Term life insurance policies can be tailored to specific needs. You can choose the term length, such as 10, 20, or 30 years, depending on your financial obligations and the needs of your beneficiaries.
5. Renewal and Convertibility: Some term policies offer the option to renew the coverage at the end of the term, but the premium rates may increase significantly based on the insureds age at renewal. Additionally, some term policies allow for conversion to permanent life insurance policies without requiring a medical exam, which can be beneficial if your circumstances change.
6. Pure Protection: Term Assurance is often referred to as "pure protection" insurance. It's designed to provide financial protection for your loved ones in the event of your death during the term, without any additional savings or investment components.
Overall, Term Assurance is a straightforward and cost-effective way to provide financial security for your beneficiaries in case of your untimely demise.
It's important to carefully consider the term length and coverage amount to ensure that it aligns with your family's needs and financial situation.
