The Concept of Life cover/ or ensuring one’s family some benefit against death risk has been debated and argued in our country much more than perhaps Western countries(Correct me if I am wrong). It has been difficult to digest the simple concept of Life Insurance as Term Insurance in its simplest form despite its lowest premium rates among others.
Term Insurance covers only Death benefit and nothing in case of surviving the term. Most of us said ‘Nah, nah! I am losing my hard earned money for an imaginary event. ..’! Only it wasn’t and it isn’t. Death is the most certain event in anyone’s life..well,..We’ll move on…
Perhaps that is precisely the reason why endowment policies became popular which had specific survival benefits/ maturity amounts with bonus accrued.
But then we said, ‘Ah, I have to wait 20 -30 years to get my money back, why?’..So, Money-back!..This one was more periodic and specific to your needs in your life time. Besides it also covered the death benefit fully, despite payouts in between. Somewhere in the course of the argument we missed the basic concept of covering life against death risk as a basic precaution. We ended up paying more and more premiums for what we felt was more and more attractive financial products like the latter two.
Perhaps now it is clear why endowment policy premiums and Money back premiums are pitched higher than the simple Term Insurance plan. Term Insurance still remains the cheapest and most affordable Life policy even today.