- Term Life Insurance is an insurance plan, which is relatively different from permanent insurance schemes. This is for the reason that it is based, as the name suggests, for a term, usually between 1 to 20 years period. The premium paid is lesser than that of a permanent insurance policy, however, the catch here is, the money is not returned in case the insurance is not claimed. This is unlike the permanent life insurance where in case the insurance is not claimed for a given period some amount of the money lesser than the total amount paid as premium is returned to the person.
This may sound a little demoralizing for those opting for term life insurance, but if you look at it from another angle, the picture is actually rosier than you think. Supposing the premium of the term life insurance is near half of permanent insurance policy, then in case you insure yourself for a period of ten years, and do not claim the insurance, you managed to save half the amount of the money in term life insurance which you would have paid up as premium in permanent life insurance. Any investment, major or minor, which you do with that amount, will definitely pay back a lot in those ten years. And that is how you can make profit and stay insured at the same time.
Most of the time, people take up term life insurances of a year or two and keep renewing it as the policy expires. This helps them save sufficiently and also keeps them insured. However, with increase in the age, the premium also increases proportionately. In spite of that, term life insurance is one of the cheapest life insurance that one can get and the saved money can be utilized to make some profitable investments as well.
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