A term insurance plan is a life insurance product that provides financial coverage to the insured for a specified period. In the event of the sudden death of the insured, the entire sum of money is paid to the members of his family. A term insurance plan provides stable financial coverage for your loved ones in the event of an accident.
Benefits of buying term insurance
Before you jump into purchasing a term life insurance plan, you should know the benefits of investing in a term life insurance plan.
We have compiled a detailed list of benefits. Read on to learn how you can better plan for your family’s financial future.
- Greater life coverage
A term life insurance plan gives you more life coverage at a higher premium. It’s better than an endowment plan. For example, a 30-year-old man can get a 1 crore term plan by paying a premium for 30 years. In the case of an endowment plan, it will not suit a 30-something.
- High sum insured at an affordable premium
The main advantage of buying a term insurance plan is that it is affordable. Compared to other life insurance plans, a term insurance plan is much more economical. Another advantage of a term insurance plan is that the earlier you invest in a term insurance plan, the lower the premium you will pay.
Buying a term insurance plan online is preferable to buying it offline because it saves you on the premium cost.
- Increase life coverage
There are stages in an individual’s life when he needs funds for his child’s education or marriage. The best thing about a term insurance plan is that it gives you the flexibility to increase life insurance coverage at crucial stages in the insured’s life, such as when they get married or when he becomes a parent.
- Easier to understand
The second advantage of buying a term insurance plan is that it is easier to understand. A term insurance plan does not have an investment component, nor is there any difficult jargon associated with the term plan.
- Several payment options in the event of death
If you’re bombarded with paying EMIs for your new home or car and struggling to manage new policies, opting for a term life insurance plan is a great option. In the event of the sudden death of the insured, family members tend to be financially burdened. To avoid such a predicament, you can avail a term insurance plan as it allows you to get a lump sum or monthly/quarterly/yearly installments. This, in turn, can help your family support themselves much better.
- Additional passengers
The best thing about a term insurance plan is that a policyholder can add additional riders to the plan. By adding riders such as waiver of premium, critical illness or disability, you can increase term insurance coverage. This is useful in cases where a family member is diagnosed with a serious illness. So instead of burning a hole in your savings, you can use the term insurance plan and pay the medical bills.
If you wish to waive your premium, you can recover all premiums with a term insurance plan with refund of premium. This works in a situation where you outlive your term insurance plan.
- Covers serious illnesses
If you know what health insurance is and you are covered for medical expenses, you may be wondering what is the need for critical illness cover? However, serious illnesses can seriously damage your financial health. Therefore, investing in a term insurance plan works well when medical issues knock on your door unexpectedly. To avoid the stress of paying exorbitant medical bills, you should get a term plan that includes a serious illness like heart disease, cancer, and other serious conditions.
- Covers accidents
If you compare a life insurance plan to a term insurance plan, the benefits of term plans are enormous. In the event of an unfortunate accident or accidental death of the insured, his family will be protected from the financial burden of medical treatment. Adding an accidental death benefit to your term insurance plan can increase your coverage and help you stay prepared for the unexpected.
- Includes premium refund
A term insurance plan only benefits the insured in the event of death. However, you can benefit from the refund of premiums of a term insurance plan if you wish to take advantage of the early maturity benefits of the plan.
In this case, you will have to pay a higher premium, and when the term plan matures, you will receive the lump sum. You will get the full amount in case you outlive the term of the policy.
- Fiscal advantages
Purchasing term insurance allows you to benefit from tax advantages. This, in turn, means you can reduce your tax liability by investing in a term plan. Under Section 80 C of the Income Tax Act 1961, the policy holder can reduce the term plan by Rs 1.5 lakh per annum. The payment, however, is exempt under Section 10(10D) of the Tax Laws.