A term insurance policy has several advantages. First and foremost, when you choose term insurance, your family's future is secured since a term insurance policy offers income to your family in the event of your death. As a result, even after your death, your loved ones can continue to lead their desired lifestyles. Even though most people are aware of term insurance plans and how they function, some people still have questions about what is insurance and if it is suitable for them. If you're wondering the same thing, here's everything you need to know about term insurance.
Meaning and Definition of Term Insurance
The most basic definition of term insurance is that it is a form of life insurance policy that offers financial protection to the insured individual for a certain period. A death benefit is given to the recipient if the insured dies within this pre-determined time frame. In essence, if you buy a term insurance policy and die during the policy's coverage period, a guaranteed quantity of money, or sum assured, is given to your designated beneficiary. The premium payments you pay toward your term insurance coverage is determined by this this sum assured.
Features and Benefits of Term Life Insurance
The following are some of the most important aspects of term insurance plans :
A term insurance policy's principal goal is to offer financial security. This degree of assurance is only possible if the coverage is sufficient to meet your family's financial needs while you are no more. As a result, term insurance policies with high coverage levels allow you to ensure that your family is adequately protected. Depending on your financial situation, you can choose the appropriate sum insured.
Premiums are Low
If the premiums are unaffordable, a large sum promised cannot be maintained. The majority of term policies cover the risk of early mortality. Therefore, premiums are relatively inexpensive. In reality, among all life insurance plans, term insurance rates are the lowest. As a result, a term insurance plan allows you to pick a high level of coverage without having to worry about paying exorbitant premiums.
Term plans offer a lengthy period of coverage, ensuring that you are protected even as you get older. Term insurance may provide coverage for up to 30 or 35 years, depending on the terms of the policy chosen and policyholder’s age.
Optional riders are available on term insurance plans to make your coverage more comprehensive. Riders are optional coverage advantages that may be added to your base policy to provide additional protection. Accidental death benefit rider, disablement benefit rider, critical illness rider, terminal illness rider, and term rider are some of the most common riders offered with term policies. Riders are not mandatory and are available at additional costs.
Term insurance policies typically pay just a death benefit if the policyholder dies within the policy's term. No benefit is given on maturity if the insured lives to the end of the period. Return of premium term plans, on the other hand, reimburse premiums if the plan matures. However, return of premium term plans comes with higher rates of premium.
Term insurance policies also provide double tax advantages. The premiums paid for the coverage are deductible from taxable income under Section 80C of the Income Tax Act, 1961(upto Rs. 1.5 Lakhs per annum). Under Section 10 (10D) of the Income Tax Act, the death benefit you get is likewise tax-free in your hands (so long as the sum assured is at least ten times of the premium paid annually). However, these laws are subject to change.
What is the best way to buy term insurance?
Now that you have a better understanding of 'What is an insurance?' and the term insurance meaning and definition, you should be able to get term insurance for yourself. You had to purchase a term insurance policy from an insurance company or an insurance agent in the past. Term insurance, on the other hand, is now quite simple to obtain online, thanks to the internet.
Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.