Introduction
Term life insurance refers to the form of life insurance policy that provides financial coverage (death benefit) to the beneficiaries if the insured person passes away during the specific period (policy term). It is most affordable and simple type of life insurance plans. In this post we are going to discuss some key characteristics of term life insurance policy.
Features Of Term Life Insurance
Some of the main features or characteristics of term insurance can be pointed out as follows:
1. Cost-effective
Generally, term insurance has lower premium than whole life insurance , it means policyholders have to pay less money to buy term insurance. So, it is cost-effective and affordable than other types of life insurance plans.
2. Simple And Easy
Simplicity is another feature of term life insurance. It is very simple to understand and requires few formalities to buy the policy.
3. Specific Period Of Time
This type of insurance plan provides coverage for fixed period of time such as 10 years, 15 years, 20 years etc. Insurance companies provide death benefit to the nominee if the insured person dies during the policy term,
4. Fixed Rate Of Premium
Another notable characteristic of term life insurance is that the rate of premium remain fixed for predetermined period (policy term). Premiums cannot be hanged (increase or decrease) during the policy term.
5. Tax Deduction
Term insurance premiums can be deducted from the taxable income. So, it provides tax benefit to the insured.
6. No Cash Value
It provides death benefit to the insured's family but doesn't accumulate cash value.
Also Read
Advantages and disadvantages of life insurance
Difference between term insurance and whole life insurance
7. Flexibility
Term insurance is flexible because of the following reasons:
* Term insurance policy can be converted into permanent life insurance without any complication and medical examination.
* Premiums can be paid on monthly basis, quarterly basis, half-yearly or yearly basis.
* Riders can be included to expand the coverage
