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How is 3 year term plan policy better than 5 year car insurance policy?

Let us take a look at the story of Inej. Inej is a 23-year-old woman living by herself in New York. To save her time and money by traveling in the metro or subway, she decided to buy a car. She knew how important insurance is, and so she decided to buy herself car insurance. While her co-workers advised her to take the 3-year term plan policy , Inej thought it would make her life easier if she brought the 5-year term plan. 3 years later, Inej received the news that she was going to be transferring to another state. While she could shift her things and car easily, she was overwhelmed when she saw all the paperwork she had to do to change her insurance company because she selected the 5-year term plan, and she began to wish she had chosen the 3-year term plan policy  instead of a 5-year term policy. It would have made her life even easier!

Car insurances can save you during unfortunate times, and it is important we stay responsible as we can never predict when it might turn out to be useful. While having insurance is important, it is much more important to choose the right one. With plenty of options available, in this article, we will talk about if a 3-year term plan policy is better than a 5-year car insurance policy.

Importance of Insurance:

 Insurance is important when purchasing vehicles. Suppose you face an unfortunate accident; it would require a lot of money for hospital bills and vehicle damage. But to save you from emptying your bank account, you can use vehicle insurance to protect your vehicle from excess spending. It is always advisable to keep your insurances on track because one may never know when it would be useful. 

In September 2018, the Supreme Court ordered that every car or two-wheeler purchased must have insurance, whether 3 years or 5 years. All cars/bikes must have 3-year insurance to drive. This Multi-years Insurance policy ensures the safety of all citizens and saves the owner from a lot of legal paperwork and hassles. 

The benefit of a Multiyear insurance policy:

Multiyear insurance policies are considered to be sustainable and easy. They offer you discounts when purchasing a multiyear insurance policy, and you do not have to worry about renewing your insurance every year, escape price hikes, the convenience of purchasing them online, and many more. 

Multiyear insurance policies can leave you without worries for the next 3 or 5 years. While it is important to drive safely, it is safer to be cautious than over-confident. Motor insurances can cover the damage cost if there is an accident when you lend your vehicle to a friend or another family member. 

3-year term policy vs 5-year term policy:

It may seem slightly confusing whether a 3-year term plan policy is better or not than a 5-year term policy. Many people are opting for a 3-year plan instead of a 5-year car insurance policy, and in this article, we will see why. Let us list out the pros and cons of 3 years and 5-year term policy plan.

Advantages of a 3-year insurance plan:

  • Simple: 3-year term plan policy can be simple and less complicated. Especially with the Multiyear insurance policy by the government, it has made legal paperwork easier and less complicated than it is made to be.
  • Flexibility: 3-year term car insurance policies are very flexible. You do not have to worry about renewing them everywhere, and you can easily opt-out of your insurer if needed. 
  • Discounts: When you opt for 3-year insurance plans, you get to avail yourself of lots of offers and discounts. Thus, you can pay less and stay secure more.
  • Tax: Different tax insurance companies may offer different discounts and tax benefits. Under section 80C, they must offer tax benefits for insurance policies.
  • Break-in issues: When you forget to renew your insurance policy every year, the company sends in an inspection to evaluate risk acceptance. This could lead to chances of high break-in insurances. 

Disadvantages of a 5-year life insurance plan:

  • Cannot change insurer: In situations where you might want to change your insurer for various reasons, it can be complicated when you have a long 5-year car insurance policy with them. It involves a lot of paperwork, and in some cases, is impossible. 
  • Waste of insurance benefits: When you choose a 5-year long-term motor insurance plan, you might want to purchase long-term insurance benefits. But it may go to waste when you don’t use it or use it within 2 years, in which case, the wastage will be reduced when you choose a 3-year term plan.
  • May not be useful: If you are a person who travels or shifts between cities constantly, then a 5-year life plan may not be the one for you. You may have to move within 2-3 years, making your 5-year term plan go to waste. 

Better choice:

Looking at the pros and cons, we can conclude that a 3-year motor insurance plan is better than a 5-year insurance policy plan. While a 5-year car insurance policy is not a bad choice, a 3-year term plan policy plan is more sustainable than a 5-year term policy.

Many people can be easily attracted towards 5-year term policy plans. They believe this will keep them worry-free for the next 5 years and do not have to worry about renewals or excess paperwork. While this may sound easy, it can also get complicated when we learn more about it. There can be many unnecessary excess expenses that we may not be aware of initially but can turn out to be a very crucial point in the end.

Conclusion:

This article went through the pros and cons of both 3-year and 5-year term policy plans. Even though we can choose the better option out of them both, the most crucial point that we must learn from this article is the importance of insurance and the benefits of long-term policy plans.

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