Check out the Pros and Cons of Buying a Term Life Insurance

It is always advisable to have your own life and medical insurance once you join a job. Since you will need to get more financial coverage for commitments like rent, student loan, home bills, and car loans. Once you finish paying for all of this, you aren't really left with a lot of money to pay for medical and life insurance policies, especially if you are on your new job. In this situation, a term life insurance policy can help you out. It is the most inexpensive way to have a basic life insurance coverage in case of an unfortunate event.

All you need to know about a term life insurance

It is the simplest and the cheapest life insurance product. Term life insurance is designed for people who are looking for temporary coverage for selected monetary commitments. Be it a loan or a debt or a means to support your family in future, term life insurance is a wise decision to make.

In short, it gives coverages for total permanent disability (TPD) and death from accidental and natural causes for a particular time period without any investment values or extra cash. So, if you have bought a term life insurance policy that has a coverage of RM150,000, the amount will remain the same throughout your term or till it expires.

Suppose the policyholder passes away before the insurance term expires, the beneficiary--generally the parents, spouse or siblings, will get the pre-fixed death benefit in full. The pre-fixed death benefits aren't taxable. Also, if the policyholder passes away after the term expires, nobody receives anything.

The Merits:

1. Easy application process

Purchasing a term life policy is easier than its counterpart. These days, most policy providers offer it online. You can purchase one after answering a series of medical as well personal questions. You don't have to take a medical test for it.

2. Ample flexibility

The best thing about term life insurance policy is that it is available to almost everyone who is below 65 years of age. Some insurance policy providers set their eligibility criteria to as low as 16 years to push youngsters to get insurance coverage.  

3. Low monthly premiums

This is the cheapest kind of life insurance in the market. You can even get a policy provider who would offer you term life coverage of RM500,000 at a premium of RM750 per year. The low premium makes it affordable for young professionals who are in their first job and taking baby steps towards gaining financial security.

The Demerit:

1. Inflation in annual premium

Many life insurance policy providers quote a revised premium every year that would be decided considering death risks, health risks and increasing age. These factors lead to an increase in the premium every year. You might have begun the premium at a lower rate but this inflation increases it annually. To avoid this rise, you can scout for a term life insurance policy that provides a fixed premium rate. You can also ask for a list of estimated increments in premium for the next 20 years.