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Term life insurance is generally less expensive than whole life insurance. However, unlike whole life insurance, term policies only offer a death benefit and have no cash value or payout after the term expires. In order to maintain simplicity, the majority of term insurance policies are "level premium," meaning that your monthly premium is fixed for the duration of the policy.
A term life policy is essentially an agreement between the policyholder (the owner) and an insurance company: In exchange for the owner agreeing to pay premiums for a predetermined term (often between 10 and 30 years), the insurance company guarantees to pay a predetermined death benefit in cash to a beneficiary upon the insured's death. Generally speaking, that benefit is tax-free (unless pre-tax money is used to pay the premiums).
A crucial inquiry to pose to oneself is, "What is the duration of my need for coverage?" A common recommendation if you have kids is to pick a term that will last them through college and after they move out of the house. You will normally pay more each month for a given coverage level the longer your term is. However, since you never know what the future will bring and it's usually easier to get insurance when you're young and healthy, it normally pays to err on the side of getting a longer-term coverage rather than a shorter one.
If you are unable to maintain your family, you should think about obtaining enough insurance to cover their needs. Whatever level of coverage you choose, the price will probably be lower than you anticipated: According to a recent survey, 44% of millennials think life insurance costs at least five times as much as they actually do.
Who gains when you pass away? Not everything has to go to just one individual. You may, for instance, leave half to your spouse and split the remaining amount among your grown children. Beneficiaries don't always have to be family members, even though they usually are. You have the option to leave all or part of your benefits to a friend, a trust, or a charity.
A feature of some policies called Convertibility allows you to convert your term insurance policy into a permanent whole life policy at a later date without having to reapply for medical examinations. You can switch the sort of life insurance you have access to thanks to a function that practically all large insurance firms offer. For instance, Guardian allows you to convert your level term insurance coverage into a permanent life policy at any time within the first five years of the policy. They even provide an Extended Conversion Rider that you can choose to use for the remainder of the policy.
Why would you go from a term policy to a whole life policy? It could be exceedingly challenging to obtain another insurance if you've experienced a significant health issue, like a heart attack. Another explanation is that the whole life policy's cash value appeals to you. Or perhaps you'd like coverage that lasts a lifetime. Right now, a term policy could be your best option, but circumstances can change.
| POLICY FEATURE | TERM LIFE INSURANCE | WHOLE LIFE INSURANCE |
|---|---|---|
| Initial Cost | Generally, less than lifetime | Usually six to ten times more costly than term for the same death benefit, but cash value can be added to premiums as it increases in value. |
| Cost Over Time | Age-related increases in renewal costs | The cost stays the same for life |
| Permanent Coverage | NO | YES |
| Length of Coverage | About ten to thirty years | Lifelong protection (as long as payments are received) |
| Premium | Either remain constant or rise during the policy's duration. | Level: Consistent each month |
| Health Exam Required | In most cases | In most cases |
| Cost can decrease over time | NO | Yes, expenses can be deducted as monetary value increases (usually after more than 12 years). |
| Ability to withdraw cash value during life of the policy | NO | Yes, withdrawals and loans are permitted; but, they will reduce the value of the policy and the death benefit if they are not repaid. |
| Guaranteed death benefit | YES | YES |
| Policy Structure and Provisions | Relatively Simple | More Complex |
Regardless of your health, renewable term plans allow you to extend your coverage for an additional period of time when your current one finishes. The premium goes up with each additional term. One significant benefit that you enjoy is the opportunity to renew the policy without providing proof of insurability. If not, you run the danger of having your health deteriorate and not being able to get insurance at all or at a lower cost, which would leave you and your beneficiaries without coverage.
It is frequently possible to convert convertible term insurance into a permanent plan. This option must be used within the conversion time. The sort of term policy you select will determine how long the conversion period is. You won't have to provide any health information if you convert within the allotted time. Your "current attained age," or your age on the conversion date, is typically used to determine the premium rate you pay upon conversion. This kind of coverage frequently offers the most protection for the least amount of money out of pocket.
The face amount of a level term policy stays constant for the whole duration of the policy. Over the course of the term, the face amount decreases with decreasing term. Every year, the premium remains the same. These plans are frequently offered as mortgage protection, with the insurance amount falling as the mortgage debt does. The mortgage can be paid off with the policy's proceeds in the event of the insured's death.
Historically, once an insurance policy is sold, insurers have not been able to alter the premium. Insurers are required to calculate premiums using conservative assumptions for mortality, interest, and spending rates because these plans may last for a long time. On the other hand, insurers that offer insurance with adjustable premiums have the option to offer coverage at lower "current" premiums in the future, based on less cautious assumptions. However, the premium is never allowed to exceed the policy's maximum guaranteed premium.
Comprehensive Insurance is highly recommended as it provides complete coverage for your car. However, for older cars, a third-party policy is a cost-effective choice, offering mandatory coverage.
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Trim your four-wheeler insurance premium by opting for a higher deductible, installing anti-theft devices, building your No Claim Bonus, avoiding unnecessary add-ons, and thoroughly comparing plans online.
Driving without at least third-party coverage is illegal in India. Penalties include fines and potential imprisonment for repeated offences.
No, the No Claim Bonus cannot be transferred to the new owner. It remains with the policy holder and can only be transferred to the new car of the same owner
No, your personal motor insurance policy typically doesn’t cover rental cars. Rental agencies usually offer separate insurance.
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