Should I opt for return of premium term insurance?
Term insurance plan are of 2 types a) Without Return of Premiums b) With return of Premiums. But usually, people buy term insurance plans which is Without Return of Premiums because in the other variant the premium rates are very High and plus the amount that we get on return is the premium paid itself. When you buy term insurance plans which is Without Return of Premiums there is no interest component added to it. This means if Mr A buys term insurance policy which is without premium back it will cost him around Rs 4000, then Mr B buys term insurance policy costing around Rs 8000, paying almost double than Mr A. Plus, after 10 or 20 years whenever Mr B gets his premium back it will be exact Rs 8000 with no interest element to it. Plus, this will happen only when Mr B does not claim on his policy.
When is the right time to buy Term Insurance?
Generally speaking, the best time to buy term insurance would be when you are young and in good health. When we buy a term insurance cover early in life, the premium amount becomes half of what the same life insurance policy premium would be if you buy term insurance 10 years later.
This is for a simple reason- as you grow older, the likelihood for mortality increases. For example, a 23 year old is considered less likely to die than a 65 year old.
This leads to a simple question, is Term insurance for youngsters only? The simple answer to the same would be No, even though the premiums which go up marginally as you grow a little older so do your responsibilities. As you grow old, you obtain a new mortgage, Get married and have children, acquire additional liabilities like Home and Car Loans. Hence, it is all the more important that you always keep yourself adequately insured. Thus, when you buy term Insurance you are certainly going for the most preferred solution.
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