Life is always unpredictable, and its uncertainties can affect perfectly healthy and happy individuals and households without warning. Can you even picture a scenario where your unfortunate demise leads to a significant financial slump for your family? While they grapple with the huge emotional loss, they will be financially vulnerable, unable to meet their monthly costs and future goals, and struggling to repay debts if they leave any behind.
Doesn’t this sound like a nightmare? If the answer is yes, you should do something about it as soon as possible. Term insurance is one of the best possible options to avoid these situations in the future while ensuring the financial well-being of your family, even in your absence. Here’s learning more about these plans and their benefits.
What Is Term Insurance?
What is Term insurance? – it is a type of life insurance that ensures pure life coverage for policyholders throughout a specified tenure. In return, the policyholder pays premiums throughout the policy duration in order to keep it active. The insurance company pays out the sum assured to the policyholder’s nominees in case of the policyholder’s demise within the policy tenure. It is a guaranteed amount that is fixed at the beginning of the policy and is determined based on how much financial coverage your family requires. This helps the family meet monthly costs and future goals, along with repaying liabilities at the same time. These are plans which come with several benefits as well. Here’s taking a closer look at the same.
Key Benefits Of Term Insurance Policies
Here are some of the most significant advantages of choosing term insurance plans:
- Higher Coverage At Comparatively Lower Costs- Term insurance policies offer comparatively higher coverage amounts for policyholders in return for reasonable premium amounts. This naturally works out to be an affordable proposition for most people. The earlier in life you purchase a term plan, the better your chance to get higher coverage for a cheaper premium.
- Guaranteed Death Benefit Payout- The insurance company pays out a pre-fixed sum assured to the policyholder’s nominee upon their demise within the policy tenure. You can choose this coverage amount, taking future family requirements, monthly costs, inflation, and liabilities into account. The guaranteed payout makes term insurance more attractive for every portfolio.
- Attractive Tax Benefits- You can get deductions up to Rs. 1.5 lakh on your premium payments under Section 80C. This naturally helps you save on taxes and lower your taxable income and get a tax refund. Your nominees can also get tax exemptions on the payout from the insurance company under Section 10 (10D). These tax benefits are also big motivators for customers with regard to considering these kinds of plans.
- Options To Add Riders- You can always add riders to your term insurance policies in order to expand the scope of your coverage and take care of more unforeseen scenarios in life. You can add riders by paying additional premium amounts over and above the base amount payable for life coverage. Some of these riders include critical illness insurance, waiver of premiums, hospital care, and more. Simultaneously, health-related riders can help you get additional tax deductions under Section 80D up to Rs. 25,000 (for non-senior citizens) or Rs. 50,000 (for senior citizens).
- Return Of Premium Options- Term insurance plans often come with the return of premium facility where you get back the premiums paid throughout the policy tenure after deducting applicable charges. This only happens if you outlive the duration of the policy.
The biggest benefit of choosing term insurance is that you can expect greater mental peace and fulfilment since your family will always be financially secure, even in your absence.
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