Insurance is among the superior financial tools that secure you greatly from unforeseen life situations that you have no control over. Moreover, insurance plans safeguard your family financially in your absence. You can also invest in insurance plans to fulfil significant life events like marriage, property investment, child’s education, clearing debts, etc. In these ways, insurance plans help you and your family to meet significant financial needs while offering optimal coverage during the investor’s absence.
One such popular policy is the term insurance plan. Here, the insurance providers offer a substantial amount to a nominee in the event of the policyholder’s death during the tenure. In this guide, you can uncover the multi-faceted benefits of investing in term insurance plans to know why it is worth your investment.
What Do You Mean by Term Insurance Plans?
Term insurance plans are one of the simplest and easiest ways to financially safeguard you and your family. This type of policy offers a death benefit to the policyholder’s nominee in case the latter dies during the policy tenure. The most significant advantage of this insurance policy is that you can get a huge amount of life coverage by investing only a few thousand as a premium.
Surprising Benefits of Term Insurance Plans
Policyholders can reap several benefits by investing in term insurance plans, such as:
Term insurance plans are a low-cost life insurance choice since they allow you to earn a sum assured at minimal rates. You may use the online term insurance calculator to estimate the premiums for a term plan with the selected level of life insurance.
Ease of Buying
Term insurance plans in India are simple to obtain since you may acquire the most appropriate term plan in a few clicks from the comfort of your own house. You may read the policy paperwork to compare new term plans and their CSR ratios before deciding on the best term insurance for you and purchasing it online in just a few minutes.
Receive Death Benefit Payouts
The term insurance policy provides substantial coverage to the policyholder’s nominee or family members if they are unable to live the policy period through several payout alternatives. Your dependents may get a lump sum payment to assist them in handling financial commitments such as a loan or mortgage, or they may acquire a death benefit payout as a monthly income to help them manage routine and day-to-day costs.
Payout of the Sum Insured
If the insured person passes away prematurely, their family members will receive the promised sum as a payout. Initially, the policyholder can choose to receive a one-time lump sum, regular monthly or yearly payments, a combination of both, or an escalating income. These options support various financial needs, including household expenses and other obligations.
Accidental Mortality Benefit
Accidental Mortality Benefit indicates that in the event of the policyholder’s death because of an unforeseeable occurrence, the family receives twice the amount they would have received in the event of a normal death. Insurance firms recognise how a tragic incident may affect a family’s existence.
Furthermore, if the victim survives the accident, the expense of medical care is excessive. As a result, they believe that this large quantity of money will assist in alleviating the family’s financial strain.
You have the option to acquire this term insurance policy with a minimum duration of 10 years. For instance, if you have a home mortgage or a personal loan with a shorter term, such as ten years, you can obtain a corresponding 10-year term insurance plan for the same amount. This ensures that if you were to pass away during the loan period, your family would have the means to settle the remaining loan balance and retain ownership of the property. Additionally, you can explore the possibility of obtaining long-term coverage that safeguards you against future or successive loans.
While the significant reason for purchasing term insurance is to secure your family’s future, you may also save money on taxes. Let’s look at the three most common term life insurance tax advantages.
- Section 80C: Under this provision, you can claim a deduction of up to Rs 1.5 lakh for certain investments and purchases, including the term life insurance premium.
- Section 80D: A Section 80D exemption is available for premiums paid for health-related coverage such as critical illness riders. You can claim a deduction of up to Rs 25,000 for the premium paid.
- Section 10 (10D): In the event of term life insurance, you can collect this benefit in conjunction with the payout. The whole sum is tax-free.
Extra Rider Benefits
Another advantage of term life insurance is that you can choose additional rider benefits to supplement your term plan. These other rider benefits are widely available, and most insurance company in India offers this benefit. You can readily add these rider advantages to your insurance by paying a small additional cost.
Growing awareness of life insurance has led to the popularity of term insurance among most individuals. This is primarily due to the significant advantages it offers, including life insurance coverage at the most affordable rates, potential income tax benefits, and, above all, the assurance that our loved ones are secure. The premiums you pay for a term insurance plan are a modest investment when weighed against the substantial benefits it provides.