Your money: Term insurance is not just for death benefits but also for disability

In India, term insurance continues to be an often overlooked protection product and only considered important for its investment and tax benefits. It is a protection product that everyone with assets and dependents must include in their investment kitty. One must never forget the fact that nobody can avoid the unexpected tragedies of life - death, disease and disability.

The fundamental benefit of term insurance is the monetary benefit the dependents receive on the death of the insured. Only condition being, death happens within the policy tenure. In case you are the only earning member in your family, term insurance becomes a must for you. It is the most reliable way to make sure your family is financially protected and secured when you're not around to take care of them. It's not just the regular death that is covered under a term plan, term plans even cover death due to pandemics like COVID-19.

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Secure your family
It's not the first occasion when the entire world has witnessed a pandemic like coronavirus. There have been instances of H1N1 Swine Flu, Zika, and Ebola outbreaks as well. No doubt, a pandemic like that of coronavirus is a good reminder to check if you have secured your life with a term plan with adequate sum assured. While many people may believe that term insurance is an expenditure rather than an investment, what they need to know is the inherent benefit such plans have in securing your family in your absence.

Several insurers have even come up with dedicated term plans that give return of premium of end of the policy tenure. These plans give a guaranteed pay-out at the end of term tenure, irrespective of the life status of the insured. Such plans are referred to as the Return of Premium (RoP) plans. Apart from providing financial aid to your dependents in case of your untimely death, term plans even provide you with adequate coverage during a Critical Illness/Disease.

There are term plan options that offer policyholders cash payouts on being diagnosed with major illnesses like cancer, stroke, heart attack or multiple organ failure. It is likely that the cost of treatment can leave your rainy day savings dry. Thus purchasing a term plan offering critical illness benefits is strongly suggested. Such plans are fixed benefit plans offering lump sum payout. Critical Illness Plan can be bought as a rider with the term plan for comprehensive protection.

Another major advantage of term plan is protection against disability. While many perceive that term insurance plans are an excellent way to create a shield against the possibility of losing a source of income due to sudden death, very few people are aware of the fact that term plans are a great source of protecting the income of the life insured in the event of disability attributed to critical injury, which is quite common in a country like India. A disability rider along with a term plan promises a monthly income for a fixed tenure or lump sum payout on the occurrence of any 'permanent' disability. In the case of total disability, the insured gets the full sum assured, while in case of partial disability, the insured only gets partial sum assured.

The writer is chief business officer, Life Insurance, Policybazaar.com

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