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It’s not shocking to know that India has one of the highest percentages of cardiovascular diseases. As uncertainties increase, people of all ages gradually understand the importance of purchasing term life insurance. In addition, physical inactivity and smoking also cause serious illnesses in people.
For this reason, every person must have a life cover that allows their dependents to deal with their loss, at least financially.
A life insurance term plan acts as a financial net for your loved ones in your absence. Read on to know more about term plans.
What is Term Life Insurance?
A term life insurance is an affordable insurance product. It offers death benefits if the policyholder passes away during the term of the plan. The payout is known as the sum assured and is paid to the nominees assigned by the policyholder.
If the insured survives the period of the policy, no benefit is offered, except in the case of a premium return policy where the insured receives an aggregate of the premium paid.
Also, there is no investment attached to a life insurance term plan. So, the premium is paid only towards mortality charges. This is why a term plan is cheaper than other types of insurance.
Benefits of Term Life Insurance
Are you still thinking about whether or not to take term life insurance? Read on to know the top benefits of a term plan and make an informed decision.
High Coverage; Affordable Premiums
One of the major advantages of taking term life insurance is its affordability. Compared to other life insurance policies, a term plan is easy on your pocket. Moreover, the premium is even lower if you take the policy at a young age.
In addition, the term insurance premium will be lower when you take the policy online. In other words, the cost-saving at the insurance provider’s end is transferred to you as a benefit.
Easy to Understand
Buying a life cover can be difficult for people who are unaware of insurance terminology. However, you won’t face such issues with a term plan.
A term life insurance is simple and is easy to understand. It is a pure life cover and does not have any investment component. You are required to pay the premium, and the insurance provider covers you for a fixed period.
Multiple Payout Benefits
Whether you’re taking a term insurance cover for covid 19 or paying off a personal loan, the various payout options surely come out as a huge benefit.
Your dependants can get a lumpsum amount from the insurer in case of your untimely demise. Some insurers will also give the option to receive monthly income along with lumpsum benefits.
A term life insurance comes with additional benefits known as riders. You can add these riders to your policy by paying an additional premium.
Income Tax Benefits
A life insurance term plan also provides income tax benefits. The premium paid towards term insurance is eligible for a tax deduction, and the payout is also exempted from tax.
As per section 80C of income tax, the premium paid towards taking term insurance allows a tax rebate of up to 1.5 lakhs. Furthermore, the death benefits are fully exempt as per section 10 (10D) of income tax.
Return of Premium Option
A pure term insurance policy provides death benefits to the nominees in case of the insured’s death but does not offer any benefits on maturity. However, you can opt for a return of premium option to get maturity benefit with your life insurance term plan.
This will require you to pay an extra premium but return the premium if you survive the policy tenure.
Critical Illness Cover
While the term insurance plan only offers a life cover, you can choose to add a critical illness cover too. This will help you get quality treatment if you get diagnosed with serious diseases, such as cancer, stroke, Parkinson’s etc.
How to Buy the Right Term Plan?
Undoubtedly, there are several types of life insurance term plans available in the market. However, you should not follow a one-size-fits-all approach with it.
Take an adequate life cover based on your financial liabilities and responsibilities. Also, make sure to do in-depth research about term plans and their benefits. The rule of thumb is to get a cover that is 8-10 times your annual income.
Secure Your Loves Ones’ Future Today
Life is uncertain, and your absence can create emotional and financial havoc in the lives of your loved ones. For this reason, you can buy a term insurance plan to secure the future of your family in your absence.
Check different term plans and look for additional benefits. Lastly, buy the policy that best suits your requirements.