What are the Benefits of Term Insurance?

What are the Benefits of Term Insurance

In this day and age, the term ‘insurance plan’ plays a vital role in securing the financial future of individuals so that they can deal with the uncertainties of life. A term insurance plan provides financial protection to the family of the life assured as a death benefit in case of an eventuality. It also takes care of the financial liabilities of the family, so that they can maintain a good lifestyle.

To choose the most comprehensive term insurance plan for a family it is important to know various benefits offered by a term insurance policy. Let’s talk in detail about various term insurance benefits.

Term Insurance Benefits

The following are the benefits of a term insurance policy:

Easy to Purchase

As compared to other financial products, buying a term insurance plan is easy. The framework of the term insurance plan is simple and it offers two simple methods of policy purchase that are online and offline. With the online process of policy purchase, the insurance buyers can directly buy the plan by visiting the insurance company’s official website.

Term plan with return of premium

This is a type of term insurance plan specifically designed to keep the customers’ requirements in mind. In ‘Term Return of Premium Plan’ (TROP), along with the death benefit, the premium paid for the entire tenure of the policy is returned to the policyholder as a survival benefit. Under this plan, the policyholder can choose to receive the sum assured amount at one go or at particular intervals of time.

Flexibility in Premium Payment

The term insurance plan offers different premium payment options so that the life assured can choose to pay the premium of the policy according to their comfortability. There are majorly three types of premium payment options offered by term insurance plans, these are single pay, limited pay, and regular pay. Under the regular payment option, the life assured can choose to pay the premium in yearly, half-yearly, quarterly, and monthly installments.

Tax Benefit

One of the main features of a term insurance plan is that it provides tax benefits along with the benefit of death coverage. The premium paid towards term insurance plans up to the maximum limit of Rs. 1.5 lakh is applicable for tax exemption under Section 80C of the Income Tax Act. Moreover, in Term Return of Premium (TROP), the survival benefit is also eligible for tax exemption under Section 10(10D) of the Income Tax Act.

Whole Life Cover

Whole life cover is one of the key benefits of the term insurance policy. Under this option, the life cover is offered to the life assured up to the age of 99 years. A term insurance policy takes care of the financial liabilities of the family in the absence of the breadwinner of the family.

High Sum Assured with Affordable Premium

This is one of the prime benefits offered by the term insurance policy. An individual can buy a life cover up to Rs. 1 crore with a minimum premium rate of Rs. 411 per month. Compared to any other life insurance product, a term plan provides the most comprehensive coverage at the most affordable premium rate. Thus, every individual who falls into a different income group can afford to buy a term insurance policy to secure the financial future of their loved ones.

Rider Benefits

To enhance the coverage of the policy there are different riders offered by the term insurance policy. These riders can be purchased along with the base plan by paying the extra premium. The rider benefits offered by the term insurance policy are:

  • Accidental Death Benefit Rider– Under this rider option an additional death benefit is paid to the beneficiary of the policy along with the basic sum assured amount in case of accidental demise of the life assured person during the policy tenure
  • Waiver of Premium Rider– Under this option, in case of demise of the life assured person the rest of the premium of the policy is waived off and the benefits continue till the completion of the policy tenure
  • Critical Illness Benefit– This is an add-on benefit offered by the term insurance policy. Under this option, the policyholder doesn’t need to pay incurred medical expenses in case of any critical illnesses as stated in the policy documents. The term insurance policy covers the critical illness expenses of the policyholder
  • Accidental Disability Benefit Rider– In case of accidental total or partial disability of the life assured the term insurance policy provides sum assured amount at regular interval of time for the next five to ten years
  • Income Benefit Rider– This rider is used to generate regular income after the policyholder’s demise. Under this rider option, the family of the life assured receives an additional income per annum for the tenure of 5-10 years along with the regular sum assured amount

Joint Term Insurance

An individual can also opt for a joint term insurance policy. In a joint term insurance plan, the sum assured amount is paid on the basis of the first claim. The sum assured amount is paid if any of the two policyholders passes away and the tenure of the policy comes to an end. In case of demise of both the policyholder, the sum assured amount is paid to the children.

Why Choose a Term Insurance Policy?

Having a term insurance policy is the best way to ensure that a family has adequate financial coverage to deal with the eventualities of life. Everyone believes nothing can happen to them, however, there is always an element of risk or concern, which prevails that ‘What if?’ The term insurance policy is specifically designed to protect plans with this concern of ‘What if?’ and all the financial crises arising out of that risk.

Wrapping it Up!

Even though term insurance is well-known for lower premium rates, one cannot ignore the other benefits offered by the term insurance policy. So, by keeping these benefits in mind the insurance buyers can choose to buy the most lucrative term insurance plan according to their requirement and suitability.




FAQs
Is term insurance tax-free?
Yes, the premium paid towards the term insurance policy is tax exempted under Section 80C of the IT Act.
How much term insurance cover should I buy?
As per the basic rule of thumb, an individual should buy a life cover of 10-15 times the annual income. For example, if an annual income of an individual is Rs. 5 lakh then he should buy a life cover of up to Rs. 50 lakh.
What is the right time to buy a term insurance policy?
It is always advised to buy term insurance while being young, as one can get comprehensive coverage at an affordable premium rate. With the increase in age, the policy buyer tends to be riskier to the insurer thus the premium of the policy also increases.
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