Benefits of Term Insurance: Family’s Financial Protection
What is Term Insurance?
Term life insurance is a type of life insurance policy that offers policyholders death coverage for a specified period of time. In other words, if the policyholder passes away while the policy is in effect, the nominee will get a lump sum payment for the insurance amount. With the exception of plans like Return on Premium or Money back plan, a standard term insurance plan has no cash value, which implies that if the insured individual lives past the policy's term, the policy will not provide any value.
You can get a term insurance policy that will give your dependents a specific corpus in the event of your death. Thanks to the money, they will be able to maintain their standard of living or pay off their debts without having to give up on their goals.
What are the benefits of Term Insurance Plan?
A term insurance plan includes all the standard term insurance benefits with the addition of return of premiums, which includes a survival bonus. For those looking for life insurance coverage with guaranteed returns, it is the best choice. The benefits of term plan with a return of premium are as follows:
Affordable Premium with High Sum Assured
A term insurance policy is a basic type of life insurance. The low price is one of the main term plan benefits. A term insurance plan is offered at a rate that is more affordable than other types of life insurance. The fact that the earlier you purchase the insurance, the lower is the rate for it, is one of the significant benefits of term insurance.
Additionally, obtaining term insurance online may result in lower premiums as compared to doing it offline. In other words, one of the advantages of a term insurance plan is that the cost-savings that occur at the insurer's end are transferred to you.
Simple to Understand
You can find it challenging to comprehend the insurance-specific words pertaining to numerous life insurance policies while purchasing a life cover. On the other hand, ease of understanding is one of the key benefits of term life insurance. This contributes as one of the factors leading to term insurance's rising popularity. Term life insurance is a type of life insurance that is solely dedicated to providing your dependents with the insured sum in the event of your demise. All that is required is that the premium be paid on time.
Various Options for Death Benefit Payout
Your family members can be responsible for paying your debts while you are gone. The EMIs for your new house, vehicle, or personal loan may all be due at the same time. The several term insurance payout possibilities here are extremely important. In the unfortunate event of your passing, your dependents may receive a lump sum payout that will enable them in managing the aforementioned financial obligations. In addition to receiving a lump sum payment as the death benefit, certain term insurance policies also allow you the choice of receiving a monthly income. With this monthly income, your family might find it simpler to handle the monthly bills.
There are riders available for term insurance plans, which you can select to increase the benefits of the standard coverage. By adding these riders, you can expand your term insurance policy for a nominal additional fee. For instance, a kind of add-on entitles you to a waiver of all future premiums in the event of dismemberment and in the event that you are diagnosed with one of the mentioned serious illnesses. This implies that even if you are unable to pay your policy's premiums, your life insurance coverage will still be in effect.
Income Tax Advantages
While protecting the future of your family is the primary objective behind obtaining term insurance, you can also save money on taxes by doing so. Let's examine the tax advantages for term life insurance.
Section 80C: This section allows you to deduct certain investments and purchases up to Rs. 1.5 lakhs, which includes the premium you pay for a term life insurance policy.
Section 80D: This exemption is permitted for the cost of health-related insurance premiums, such as critical illness riders. For the premium you paid toward it, you may deduct up to Rs 25,000.
Section 10 (10D): In the case of term life insurance, this benefit may be collected at the same time as the payout. Taxes are not due on any of the money at all.
Coverage for Critical Illnesses
Critical illnesses can strike at any stage of life, and the cost of the necessary care may wipe out all of your finances. Although the key advantages of term life insurance only cover life, they provide the insured options to choose to include add-ons or riders to your policy to cover critical illness.
Coverage for Accidental Death Benefits
Accidents can occur at any time and can result in dismemberment or death. The Accidental Death Benefit is an option for your term insurance policy. This will provide defense against any future accidents.
Premium Option Refunds
In the case of an unexpected death of the life insured, a pure term insurance plan only offers life coverage to the beneficiary. It offers no advantages in terms of maturity. However, if you choose the return of premium option in your term insurance plan, you are entitled to receive a maturity benefit. If you choose this option, you will have to pay higher premiums, but if you survive through the policy's term, you will receive a refund of your whole premium payment. Taxes, levies, rider premiums, and modal amounts paid on the premium will not be included in the total premium amount that will be refunded.
Why Choose Term Insurance Plans?
Plans for term insurance provide financial protection for the entire family in the tragic event that the insured passes away. Additionally, you can purchase optional coverage for fatal accidents or critical diseases. You are protected for a sizable amount of time, and the rates are reasonable. It offers more coverage for a lower price, is easy to understand, and has significant tax advantages.
However, before taking into account all the advantages, you should keep in mind that the primary goal of insurance is protection, and not savings. Term insurance, unlike the majority of life insurance policies, stays true to this goal. Based on the lifestyle you lead, you might think nothing unanticipated would ever happen to you. However, the possibility of an untimely death due to external factors, such as an accident, illness, or other uncontrollable occurrences, always exists. Purchasing a term insurance policy is crucial because it helps your family reduce any financial hardship they may experience while you are away.
Who is eligible for a term life insurance plan?
You are eligible to apply for a term plan if:
- You are an Indian citizen, non-resident Indian (NRI) or person of Indian origin (PIO).
- You undergo a medical test so your insurer understands any medical conditions you may have.
- You are able to furnish the necessary photo identity proof, including address, age and income proof.
What are the types of term insurance plans?
The various types of term insurance plans available in the market are:
- Pure Level Term Insurance Plan
- Return of Premium Plans
- Increasing Sum Assured Plan
- Term Insurance Plan with Income Benefits
What kind of deaths are not covered in term insurance plans?
Any compensation for accidental deaths brought on by drugs or alcohol or if the insured was engaged in criminal behavior are not permitted. Term plans do not cover accidental deaths that occur while participating in adventure sports like skydiving, paragliding, bungee jumping, and others.