Top Term Insurance Benefits
Aside from providing financial security to the family, a term insurance plan provides a slew of other advantages, such as lower premium rates, additional rider benefits, and so on. Let's take a look at the benefits of term insurance in more detail.
1. Extensive Life Coverage for an Affordable Premium
One of the most remarkable advantages of term insurance is its low cost, affordable premiums. Compared to other types of life insurance plans, a term insurance policy has a lower premium, which ensures that you can easily pay for it. Another significant benefit of term insurance is that the premiums are even more affordable if you purchase it early in life - Remember the golden rule of buying insurance- 'The early, the better.'
2. Term Plan with Return of Premium Payment
A pure term insurance plan only offers life coverage to the nominee in case of the life insured's an untimely death. Furthermore, if you choose the return of premium option on a term insurance policy, you will receive term insurance with maturity benefit. This choice will require you to pay higher premiums; however, you will receive a refund of all premiums paid in case of your survival till the end of policy tenure.
3. Whole Life Coverage
One of the most important term insurance benefits is whole life insurance, which provides total protection for policyholders up to age 99. A term insurance policy is aimed to assist in relieving the financial strain on family members if the prime earner is no more.
4. Flexible Payments Options
Depending on your cash flow, you can pay the premium monthly, biannually, or annually. Single premium plans allow you to pay for your entire premium all at once. As a result, late payments and insurance lapses are no longer a problem.
5. Additional Riders to enhance your Term Plan
At a minimal charge, riders expand the term insurance benefits. These riders safeguard your family in the event of certain unforeseen circumstances. However, these riders are not mandatory and are available at additional cost.
- Critical illness coverage : If you are diagnosed with a covered critical illness for the first time, the insurer will make you a lump sum payment. The revenues can be used to pay for your costly therapies while maintaining your savings.
- Accidental death benefit : If the insurer meets a fatal accident, his/her family will get additional benefits in addition to the base value guaranteed.
- Deferral Premium Payment : Premium payment is waived if you fail to pay your premiums due to causes covered by your plan, and your life insurance coverage continues until the term ends.
6. Income Tax Savings Benefits
Term insurance policies come with tax advantages. While the premiums you pay for term insurance are tax-deductible, the payouts are likewise exempt from taxes under current tax regulations. Benefits under tax laws are, however, subject to change.
Term Insurance Benefits Under Section 10 (10D) :
According to Section 10(10D) of the Income Tax Act of 1961, the death benefit of term insurance plans is exempted.
Section 80C Term Insurance Benefits :
The premium you pay to obtain a term insurance plan is tax-free up to a limit of Rs.1.5 lakh per year under Section 80C of the Income Tax Act 1961. Under this section, you can gain maximum tax benefits from term insurance by choosing the plan with the most coverage available to you based on your health and age.
Types of Plans :
Level Term Plans
This is perhaps the most basic and simplest form of term insurance, in which the sum assured remains constant during the policy term and term insurance benefits are paid to the nominee upon the life insured's death.
TROP (Return of Premium) Plans
Compared to the standard term insurances, these plans include a maturity benefit, which means that if the life insured survives the policy term, the entire premium paid will be reimbursed to him or her.
Increasing Term Plans
A policyholder can increase the sum assured every year while keeping the same premium throughout the policy term.
Decreasing Term Plans
Contrary to rising term plans, the sum promised in these plans decreases every year, on a pre- defined basis, to match the life assured's decreasing insurance needs (however, the premium remains constant). These policies are useful when the policyholder has already taken out a large home/personal loan or pays an EMI.
Convertible Term Plans
These are pure term plans have the option of being converted into any other form of plan at a later period by the policyholder. For example, if you acquired a 20-year term insurance plan but wish to convert it to an endowment plan, a whole life insurance plan, or something else after five years, you can do so without any problem.
Term Plans with Add-on Riders
Term plans also include rider options such as critical illness coverage, accidental death coverage, and more, which can be added to a standard term plan for a nominal price.
For instance, if a person chooses a rider and receives a premium waiver benefit, he or she will not be responsible for future premiums in the event of any unforeseen circumstances covered by the rider chosen.
Policyholders who are still perplexed about why we are so enthusiastic about term insurance plans consider this: a term insurance plan is the only way to protect your family's financial well-being in your absence completely. And the cost of this protection is pretty affordable, as term plans have the lowest premiums among all life insurance plans.
So, go ahead, get yourself insured with a term plan today!