Term Life Insurance is the simplest and cheapest form of life Insurance which provides pure protection at affordable rates. Such Insurance Policies provides risk cover to the investor for a specific term and does not carry any saving element.
This means that the Insurance Company will only pay claim in the event of the investor's death to its nominee. Term Policies may also pay claims to the Insurer in case of Total Permanent Policy. In the event of the Insurer surviving the term, the policy will be terminated and the insurer will not be paid any amount since term policies do not carry any maturity amount.
You may be inadequately insured if you earn 8 Lakhs annually but your policy's sum assured is just 1 lakh. The general rule says that your Life Insurance Policy's sum assured should be equal to your HLV or Human Life value which is roughly equal to ten times of your annual income.
This means that if you earn 8 Lakhs annually you should have Life Insurance worth 80 Lakhs. You can take a single Term Policy worth 80 Lakhs or more than one life Insurance policies which are a mix of term and endowment policies.
There are multiple Term Insurance Policies available in the market. There are companies and Policies with poor claim settlement record. How will you find out which one is best for you? It is very difficult for a layman to pick the best. Investors may also get conned by some companies, who may overcharge you or sell you the wrong product.
This is why you should never buy a Life Insurance Policy without consulting your financial advisor because you run the risk of over insurance and underinsurance. A wrong policy may also cost your family during the claim settlement process. You should believe only in the expert for all your Insurance needs.
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