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About Term Policy

Term Insurance

Term Insurance is the life insurance policy that provides financial coverage for a certain period of time or a specified ''term'' of years in the form of death benefits on the demise of policy holder. A term plan offers a life cover to the insured at the lowest premium.

What is Term Insurance?

Term life insurance is also known as pure life insurance. It is an insurance plan that guarantees the payment of a stated amount of death benefit on the death of insured during active term of policy as agreed upon . Once the term expires, the policyholder can exercise an option to either renew it for another extended term, convert the policy to provide the permanent coverage, or allow the policy to terminate. It can be renewed annually or even allow to cease. In case of extension of the policy, the premium amount to be paid will be recalculated and it can be higher than the earlier payments due to different parameters like age, health condition, etc.

Among all the life insurance Product, Term life insurance Policy offers the Higesht life coverage for the Minimum Premiums. Term insurance covers the risk of an untimely death of the insured during the policy term. Some insurance companies also cover permanent or partial disability wherein the policyholder's regular income is disrupted. 

Why you should Buy Term Insurance ?

  1. Low premium – Through a term Insurance Plan, you can have the highest death benefit or life cover in lieu of a nominal premium. Premium on term plan are lower than other insurance plans. It provides life protection plan without any ancillary benefits or investment element .
  2. Family Security - Life insurance acts as an important financial safeguard to the family if the breadwinner of the family suddenly passes away or gets permanently disable. We don’t know what lies ahead of us, and a family members dependent on you might face different difficulties in case you meet any mishappenings. For  example, Your son wants to be an engineer and your daughter wants to be a doctor but they might not be able live their dreams in your absence. A very low amount of money, you pay as premium in a month can secure your family's future.

Types of Terms Policy 

There are number of Terms insurance plans available in the market offered by different Life Insurance Companies in Nepal. These Insurance Company offer different type of Term Insurance with each Insurance Policy having its own set of different and unique features. We have mentioned different type of Term Insurance plan below:

  1. Regular term Insurance : In this type of term insurance Plan, Insured person gets the cover against various risks ( Life risk ,accident Risk etc ). It is most common and best term plan where premium is very low in comparision to sum insured which is very high. Insured person's nominee gets the insured amount only in the event of death and there is no maturity value in this type of Plan.
  2. Return of Premium Plan : In this type of Plan Insured person gets back the premium paid during the policy period if the person survived the policy period, or amount of sum insured is given to the beneficiary if person dies during the policy period. These term plan are increasingly becoming popular because policy holder gets the money they have Invested in the term insurance policy at the end of the policy Period .These plan also gives the option to add on various Riders . The periodic premium is in this plan is  slightly higher than regular term Insurance however it gives the best value to the Person.
  3. Group Term Insurance Plan : These Plan are specially designed for business houses such as companies, firm and other legal entity in Nepal. Generally, these term plan are for 1 year and provides similar benefits as General term Insurance plan gives. Employee Insurance is compulsory by labour law in nepal, so, this plan is best suited for every classes of employer in Nepal.

Policy Terms 

  1. Entry Age : To be eligible for term insurance, one must attain the minimum age of 16 Years (18 Years in some companies). The Premium of the term plan depends on the age along with lifestyle of the person  and people who are looking for a term policy should opt for term insurance policy in young age for a longer period.
  2. Duration : The duration of every policy varies with different period plan starting from 5 years upto 35 years. Different companies operating in insurance business across Nepal offer different period plan depending on customer's choice.
  3. Maturity age: Term insurance policy offers coverage to the policy holder upto 65-70 years of age depending upon policies and insurer companies.
  4. Maturity Benefit : These plan do not come with maturity benefit. If any one wants insurance policy offering maturity benefits, then, Return of premium plan or Endowment Plan is Suggested.
  5. Additional optional benefit such as Premium Waiver Benefit (PWB),  Permanent Total Disablity (PTD),  Accidental Death Benefits (ADB), Accidental Medical  Reimbursment (AMR), Critical illness, etc comes with the term policy with additional premium which is generally a small amount of money.