When it comes to life, there are no guarantees. What you can do however is provide your family with monetary protection, so that they are not left stranded in the event of your untimely passing. There are many options out there when it comes to risk protection. Term assurance is a type of financial coverage which will provide a payout to your beneficiary or survivor.
The following guide by Monetary Library will provide you with some general guidance regarding term assurance.
General
Term assurance or term life insurance provides coverage for the deceased individual’s survivor or beneficiary through a series of fixed payments over a set duration. If the insured individual should pass away during the term-period, the death benefit will be awarded to her or his beneficiary. This is an affordable method of purchasing coverage for a specified period of time. It provides life coverage with the option of adding on Critical Illness Cover.
This type of plan will provide a pay if the individual is suffering from a terminal illness and is expected to survive for less than a year.
A Term Assurance plan may be obtained by a person or in conjunction with another person. The cash amount is paid out with the first claim only. To obtain term assurance coverage, the person must be aged between 16 and 89. The coverage period is set according to the individual and is subject to restrictions spelled out in the plan.
Term Assurance is usually not very flexible. Once they are started, you cannot alter them, unless the “Renewal and Conversion” option is selected.
Aim
The main reason why people take out Term Assurance is provide family members or survivors a payout upon the insured person’s death. A payout can also be sought if the insured individual is diagnosed with an illness that is described in the terms of the plan. If a payout is issued while the insured individual is terminally ill or passes away, the plan will terminate.
Payout
A payout from a Term Assurance plan occurs in the following situations:
- When the insured individual passes away during the term itself
- If the insured individual is terminally ill and will not survive for more than a year
- If a claim is made that meets the definitions of the insurer
- If a cash payment of the sum is made and the plan terminates
Risks
If for some unforeseen circumstances, you are not able to pay the premiums on time, the plan and cover will subside within thirty days. In this case, a refund will not be issued.
Term Assurance plans do not have a cash value.
While completing the Term Assurance application, ensure that all questions are answered completely and thoroughly, with accuracy. Otherwise it will result in inadequate coverage or invalidate claims made in the future.
Deciding to protect your family financially with a Term Assurance plan is a wise decision, but read all the guidelines and restrictions, and ask all necessary questions before making a commitment.
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