What is a regular premium term insurance policy?
 |
| A regular premium term insurance policy By Freepik.com |
A regular premium term insurance policy is a type of life insurance plan that provides coverage for a specific term or duration, typically ranging from 10 to 30 years. It is called "regular premium" because you pay premiums on a regular basis, usually monthly or annually, throughout the duration of the policy.
Under this policy, if the insured person passes away during the term of the policy, a death benefit is paid out to the beneficiaries named by the policyholder. The death benefit is the sum assured or the face amount of the policy, which is predetermined at the time of purchasing the policy. This benefit is typically paid as a lump sum and is tax-free for the beneficiaries.
Regular premium term insurance is designed to provide financial protection for your loved ones in case of your untimely death. It is a relatively affordable option compared to other types of life insurance, such as whole life or universal life insurance, because it focuses solely on providing a death benefit and does not accumulate cash value or offer investment features.
It's important to note that once the term of the policy ends, the coverage terminates, and there is no cash value or return on premiums paid.
If you wish to continue the coverage, you would need to renew the policy, typically at a higher premium rate, or consider other insurance options.
