A Term insurance plan is the simplest kind of life insurance plan that provides life coverage, further protecting the family of the policyholder. In case of the sudden demise of a policyholder, the family members will get life coverage that will include a predetermined amount as death benefits.
Points to be considered
Before buying a term plan, you should keep in mind the points below:
- A term plan provides death benefits to the nominees of a policyholder in case the insured dies during the policy tenure.
- They are pure protection plans, i.e., they do not include a saving component.
- The premium amount is dependent upon age, life expectancy, and health of an insured.
- The term plan can be converted into a whole life insurance policy, depending upon the insurance company.
- Buy a term plan for a period of 10, 15, 20 years or above, and get them renewed for an additional tenure.
- The best insurance companies offer low premium amounts, flexible and smooth application processes, and perfect customer service.
Key Benefits of a Term Plan
Provided below are the Benefits of Term Insurance Plan:
- Whole Life Coverage
With this plan, the family will receive financial security in the absence of the policyholder. Though term plans normally end after a certain period of time, the whole life insurance includes coverage till 99 years or above.
- Return of Premium
Under the Return of Premium plan, all the premiums paid throughout the tenure are paid back in case the policyholder survives after the tenure is over. Though it charges a higher premium amount, it provides a facility to receive the premium amount if no claim is raised. This plan is most suited for when you need both coverage and financial returns.
- Income Tax Benefits
Get below mentioned income tax benefits:
- Get a deduction for some investments done, which includes premium paid towards term plans maximum for up to INR 1.5 lakhs u/s 80C of the Income Tax Act, 1961.
- Get deductions of up to INR 25,000 for health-related problems, such as critical illnesses, under 80D of the Income Tax Act of 1961.
- Get a tax exemption of the complete amount of the payout received u/s 10(10D) of the Income Tax Act, 1961.
- Multiple Death Benefit Payout Options
In case of the sudden demise of the policyholder, the family members will get multiple death payout options, i.e., beneficiaries can use them to repay their loans or debts.
- Add-On Riders to Strengthen the Insurance
With the help of additional riders, one can enhance the features and benefits of term insurance. Examples of such riders are accidental death, premium waive-off, and permanent disability at an additional premium cost.
- Critical Illness
As treating critical illness is costly, adding a rider can be of great help and support. A term plan only includes life coverage, but adding riders can help avoid the drainage of all your savings.
- Return of Premium Option
In the case of a term plan, there is no benefit on maturity, but if the return of a premium plan is opted for, one can receive the maturity benefits. Though the premium amount is higher, if the policyholder survives, the premium amount will be received back.
- Financial Security for Dependents
One of the most important benefits of a term plan is to provide financial security to the dependents in case of a sudden demise of the policyholder. The beneficiary will receive a lump sum to help them maintain their lifestyle and fulfil their financial duties.
- Affordable Premiums
The most important benefit of a term plan is providing coverage at an affordable premium cost. Housewives can also avail of it at an affordable premium cost, which helps secure financial protection. Also, one can use a Term Insurance Calculator to determine the premium amount, which will make the process hassle-free.
- Early Payout in the Case of Terminal Illness
Some of the term policies allow the policyholders having terminal illnesses to receive an early payout even if they are alive. It helps cover medical expenses and helps improve quality of life.
- Supplemental Coverage During Critical Years
There are some critical years in everyone’s life, such as children’s higher education, marriage, repaying debt or a loan, etc. Hence, one can get supplement coverage, providing mental peace during these years.
Benefits of Buying a Term Plan at an Early Stage of Life
Provided are the benefits one can achieve if one buys a term plan at an early stage of life:
- Low Premium Amount
As we know, insurance companies calculate the premium amount depending on the risk, which is generally lower in the case of young persons. One can buy a term plan at the age of 18 and can avail of the best premium amount. Once the premium amount is locked at an early age, it will remain fixed during the policy’s remaining tenure.
- Long Coverage Period
Buying a term plan at an early age ensures coverage for a longer period, further providing financial security for the family members. A long coverage period will also help to achieve major life events, such as children’s marriage, education, and retirement planning.
- High Sum Assured
A higher amount of sum assured ensures financial security, independence, and the ability of the family members to meet financial obligations in the absence of the policyholder.
Conclusion
Term Insurance is a simple, affordable, and flexible tool that helps provide financial security, ease the complexity of taxes, etc. It helps safeguard the financial future of the family members with its versatility and cost-effective nature. One can get a large coverage with a low premium by comparing and then purchasing the insurance online.