Policy Term Meaning
Through a term insurance policy, you can get life coverage from a certain number of years to whole life. When you take a term policy, you have to pay premiums for it regularly. You can avail the benefits of a term policy by paying premiums for a specified period of time. In case of accidental death of the policyholder during the policy term, the sum assured is provided as death benefit to the nominee by the policyholder.
While buying a term insurance policy, you have to choose the term insurance policy term. You can choose a term insurance policy for cover ranging from a certain number of years to whole life. The specified number of policy years chosen for coverage is known as the policy term.
Suppose if you have chosen a term of 60 years for a term insurance policy then till the term of 60 years you will be covered under the insurance policy. This 60 years period is known as Policy Term in term insurance policy.
Thus a policy term is the period of time for which the policyholder is covered under a turn plan. It is also called the policy tenure.
How To Decide The Policy Term?
While determining the policy term for a term insurance policy, you can take into account your financial needs and life goals for your future. A term insurance policy can make you financially secure in the future. But for this it is also necessary to choose the right policy term so that you can get the coverage of a term insurance policy till the time of need of life.
While determining the policy term for a term insurance policy, you can keep the following points in mind-
- Retirement:
While choosing the policy term for a term insurance policy, you should keep in mind your retirement age. You should see that you can cover all your loans, financial liabilities etc. through a term insurance policy till your retirement age.
Thus by the time you retire, you have met all your principal liabilities. Hence it is necessary that you subtract your current age and retirement age while buying a term insurance policy. The age thus arrived at would be the ideal policy term for your term insurance policy.
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- Loan:
If you have taken any kind of loan, then you can cover it under term insurance policy. In case of accidental death during your policy term, the loan taken by you is covered through the sum assured of the term insurance policy.
Thus, if you have taken a loan, you should take a term insurance policy for the duration of the loan. You can also secure your loan liabilities by taking a term insurance policy for the duration of the loan. Due to this, your family is not burdened with any additional liabilities in your absence.
- Life Cover:
While choosing the policy term for a term insurance policy, you need to look at the number of years of life you wish to avail of the term policy. If you need a term policy coverage for whole life then you can choose the policy term for whole life. It provides financial protection to your family in your absence along with covering any kind of financial liabilities for the rest of your life.
- Life Goals:
If you also want to cover your children’s education, their marriage and other types of expenses through a term plan, then you can choose your policy term accordingly. You can estimate what financial protection you may need in what years of life. After estimating this, you can choose the policy term of your term plan.