5 Features and Benefits of a Term Policy

5 Features and Benefits of a Term Policy

A term life insurance policy is a type of life insurance that provides coverage for a specific period of time or term. If you pass away during the term of the policy, your beneficiaries will receive a death benefit. If you live beyond the term of the policy, it expires, and no death benefit or maturity benefit is paid.

Term policies are less expensive than permanent life insurance policies, such as whole life or universal life. This is because term policies provide only temporary coverage, whereas permanent policies provide lifetime coverage.

5 Features of a Term Life Insurance Policies

There are several features and benefits of term life insurance policies:

1. Low Premiums

Term life insurance premiums are much lower than premiums for permanent life insurance policies. This is because term policies provide only temporary coverage, whereas permanent policies provide lifetime coverage.

2. Flexible Premiums

You can usually choose to pay your premiums on a monthly, quarterly, or annual basis.

3. Convertible Policies

Most term life policies are convertible, which means that you can switch to a permanent policy without having to undergo a medical exam.

4. Renewable Policies

Most term life insurance policies are renewable, which means that you can easily renew the policy at the end of the term.

5. Tax-advantaged savings

If you select a policy with cash value, the death benefit paid out to your beneficiaries is tax-free. This is because the proceeds from a life insurance policy are considered part of your estate and are tax-free. However, tax laws are subject to change from time to time.

As you can see, there are several features and benefits of term life insurance policies. If you are looking for temporary life insurance coverage, a term policy is a good option.

Some Other Features & Benefits of Term Life Insurance Policies-

  • Coverage for a specific period of time, typically 10, 20, or 30 years.
  • Low premiums in comparison to other life insurance policies
  • Renewable without having to provide evidence of good health.
  • Convertible to a permanent life insurance policy without having to undergo a medical exam
  • Provides tax-advantaged savings if you select a policy with cash value.

When considering purchasing a life insurance policy, it is important to weigh the benefits of a term policy against those of a permanent policy.

Term policies are less expensive, but they provide only temporary coverage. Permanent policies are more expensive, but they provide lifetime coverage. Which type of life insurance policy is right for you depends on your needs and budget. If you are looking for temporary life insurance coverage, a term policy is a good option.

If you are looking for lifelong coverage, a permanent policy may be a better choice.

Eligibility for the Term Policy

  • The person is in good health.
  • The person has a regular source of income.
  • The person is not elderly or near retirement age.
  • The person has short-term financial obligations, such as paying for educational costs or credit card debt.
  • There are no pending legal issues that could result in the policy being challenged after your death.
  • You are willing to pay premiums until you die or the term of the policy expires, whichever comes first.
  • You have sufficient money saved to cover the cost of premiums during the term of the policy. If you do not have enough savings, it may be better to purchase a permanent life insurance policy.

As you can see, there are several factors to consider when deciding whether or not a term policy is right for you. If you are in good health and have short-term financial obligations, a term life insurance policy may be the right choice.

However, if you are elderly or near retirement age, it may be better to purchase a permanent life insurance policy.

Whole Life vs Term Life Insurance

There are several key differences between whole life and term life insurance policies :

  • Whole life policies provide lifetime coverage, whereas term policies provide coverage for a specific period of time.
  • Whole-life policies are more expensive than term policies.
  • Whole life policies offer cash value, which is a savings account that grows over time. Term policies do not offer cash value.
  • Whole-life policies are more complicated than term policies and can be difficult to understand.
  • Whole life policies provide guaranteed death benefits, whereas the death benefits of term policies are not guaranteed.

As you can see, there are several key differences between whole life and term life insurance policies.

Which type of policy is right for you depends on your needs and budget. If you are looking for lifetime coverage, a whole life policy may be a better choice than a term policy.

However, if you are looking for temporary coverage, a term policy is a good option.

Disclaimer:

*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.

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