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Term Plan: Meaning, Features & Benefits

Term Plan: Meaning, Features & Benefits

A term insurance policy comes with lots of benefits. First and foremost, a term insurance policy offers financial security to your loved ones in case you loose your life. This helps your family to have the desired lifestyle even after your death. Even though most of the people are aware of term insurance plans and how they function, some people still have questions about term insurance. If have some questions, this article will help you understand the fundamentals of a term insurance plan.

What is a Term Plan?

To explain simply, a term insurance is a form of life insurance that offers financial protection to the insured individual for a certain period. A death benefit is offered to the recipient if the insured dies within this pre-determined time frame. So, if you buy a term insurance policy and die during the policy's coverage period, a guaranteed amount of money, also known as sum assured, is given to your designated beneficiary. In return to the sum assured you have to poy your premiums on time. The premium payments you pay toward your term insurance coverage is determined by many factors such as your age, health condition, sum assured chosen, etc.

Advantages of a Term Life Insurance

The following are some of the most important features of a term insurance plan:

Financial Security with Sum Assured

The primary goal of a term goal of a term insurance policy is to offer financial security. This degree of assurance is only possible if the coverage is enough to meet your family's financial needs while you are not around. Therefore, 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.

Affordable Premiums

If the premiums are unaffordable, a large sum promised cannot be maintained. Most of the term policies cover the risk of early mortality. Therefore, premiums are relatively inexpensive. Generally, out of most life insurance plans, premium rates of a term insurance are the lowest. This enables you to pick substantial life coverage without having to worry about paying high premiums.

Long-term Coverage

Term plans offer a long 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.


You have the option to make your term insurance coverage even more comprehensive with the help of riders. Riders are defined as optional coverage advantages that may be added to your base policy to offer extra protection. Accidental death benefit rider, disablement benefit rider, critical illness rider, terminal illness rider, and term rider are some of the most common riders that one can add to their basic term insurance policy. However, please note that riders are not mandatory and are available at additional costs.

Death Benefit

Generally, term insurance policies just pay a death benefit if the policyholder dies within the policy's term. No benefit is given on maturity, i.e., if the insured survives the policy term. 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.

Tax Benefits

Term insurance policies also come with 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 from time to time.

How to Buy a Term Insurance?

Now that you know the basics of a term insurance, you should be able to get term insurance for yourself. You can purchase a term insurance policy from an insurance company that is trustworthy and has an impressive claim settlement ratio. Also, you can search online for the required term plan after comparing the aspects mentioned above.


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.