- Rider Protection
- Payout Options
- Lump sum sum assured
What are Term Insurance Benefits?
Term insurance has several benefits that help your family build your unfulfilled dreams, even in your absence. Whether it is living expenses, marriage, children's higher education, or clearing your debts, term insurance is the best way to help your family financially even when you're not around by offering enough life cover. These plans offer a high life cover at low premiums, long-term protection, tax savings benefits, and the flexibility to choose the payout option. Let's go deep into the several other benefits of term insurance plans.
Various Benefits of a Term Insurance Plan
| Life Cover | Term insurance offers high life cover at affordable premiums. Throughout the policy tenure, if something happens to you, then your family receives a death benefit. |
| Regular Payments | With a term insurance plan, you can choose the payment of the premiums mode such as monthly, half-yearly, or annually. |
| Life Stage Benefit | A life stage benefit is an ideal feature that helps the policyholder enhance coverage limits later as they progress. |
| Choice of Payout | Term insurance allows policyholders to select payout options, such as lump sum, annuity, or regular installments. |
| Debt Repayment | Death benefit can be used to pay off the remaining debts of a policyholder. |
| Low Entry Age | Term plan comes with a low entry age of just 18, and the premium is also low because the risk to one’s life is low at a young age. |
| Maturity Benefits | A term insurance plan with a return of premium offers maturity benefits when you outlive your policy tenure. The insurer offers a return of the sum of all premiums paid throughout the policy term minus GST. |
| Optional Riders | Term plans come with add-on riders. It allows policyholders to enhance the base cover by paying an additional premium. |
| Tax Benefits | Under Section 80C of the Income Tax Act, you can get a tax deduction of up to ₹1.5 lakhs for the premiums you pay. Under Section 10(10D) of the Income Tax Act, policyholders can claim tax exemption on death benefits and maturity benefits. |
| Adjustable Cover | With a term insurance plan, you can increase or decrease your life cover based on your evolving financial needs. It's up to you to choose a higher sum to secure your family even in your absence. |
| Special Exit Value | Under the Special exit value, policyholders can withdraw the plan at a specified point in the policy term (free of cost) and receive all premiums paid minus GST. |
| Married Woman Property Act | Buying a term plan under the Married Women's Property Act 1874 (MWP Act) helps women by securing the death benefit only for themselves when their spouse dies. It means that no other relative or creditors can claim the death benefit. |
Benefits of Buying a Term Insurance Early
Here are the few benefits of buying a term insurance plan early in life:
- Lower Premiums
The primary benefit of purchasing a term plan early in life is that it allows you to avail of a lower premium because the risk on one’s life is low at a young age. However, purchasing the same-term plan at a later stage in life may lead to higher premiums. - Longer Coverage Period
You can attain a life cover for more years if you buy a term plan early in life. Therefore, you can get a life cover for a longer tenure. - Higher Life Cover
Generally, a higher sum assured depends on the policyholder's salary. If you're a salaried person earning enough, then opting for a high sum assured will be easier.
Rider Benefits of Term Insurance
The insurance provider offers policyholders the flexibility of customizing the base plan by adding multiple riders which makes the term plan more specific toward the policyholder’s demands from it. Stay tuned with us to look at all the available riders that you can add to the base plan to enhance term plan benefits:
Critical Illness Rider
A Critical Illness Rider offers the death benefit on the diagnosis of any of the critical illnesses listed in the policy.
Terminal Illness Rider
A Terminal Illness Rider or accelerated death benefit rider offers death benefit to the policyholders if they're diagnosed with a terminal illness. The policy terminates after this payout.
Accidental Death Benefit Rider
An accidental death benefit rider offers their loved ones access to death benefits when a policyholder accidentally passes away.
Waiver of Premium Rider
Waiver of Premium rider is an optional feature that waives insurance premiums in case the insured person becomes critically ill or physically impaired.
Accidental Total Permanent Disability (ATPD) Rider
The Accidental Total Permanent Disability (ATPD) Rider offers financial protection against permanent disability caused by an accident throughout the policy tenure. However, the policyholder can select the payout option, whether they want death benefits in a lump sum amount or monthly income based on their needs.
What is the Importance of Sum Assured in Term Insurance
The sum assured amount is essential in term insurance because it determines your family's financial security. However, it also has a direct significant impact on the premium of a life insurance policy. The life cover offers peace of mind to the policyholder that their family will be financially cared for even in their absence.
A substantial sum ensures a secure future by covering living expenses, marriage, children's higher education, or even clearing your debts. Choose the adequate sum assured amount for your term life insurance by clicking the tabs below.
1.25 Crore
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1 Crore
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50 Lakh
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Conclusion
Most of us know that the main reason for buying a term insurance plan is financial security, but term insurance has many benefits. You must choose sufficient life cover in a term insurance plan to beat inflation. These plans come with a high life cover at low premiums, tax savings benefits, optional riders, Etc. You can also avail yourself of these term insurance benefits by comparing and buying the most suitable term plan.
Benefits of Term Insurance: FAQs
1. How early can I buy a term insurance policy?
You can buy a term insurance plan as early as the age of 18 years.
2. Is it necessary to buy a term plan?
If your family depends on you financially then you should invest in a term insurance plan for sure.
3. How can I choose a good term policy?
Consider factors like your dependents, income, lifestyle, liabilities, CSR of the company, riders of the desired plan, and tenure offered to buy an effective term insurance policy.
4. What are the benefits of term insurance?
Term insurance offers a death benefit, tax benefit, affordable plans, return of premium, accidental death benefit, critical illness benefit, and much more.
5. How much tax deduction is allowed in term plan benefits?
A deduction of up to 1.5 LPA for the total premium paid is allowed under section 80C of the Income Tax Act, of 1961.
6. Besides premature demise, what other coverage is included under the term insurance policy?
With term insurance plans, you may opt for additional coverage using riders for coverage of conditions such as terminal illness, accidental death, critical illness, and accidental disablement.
7. Are maturity benefits covered in the case of term insurance policies?
Maturity benefits are not included in the traditional term insurance plans. However, some policy types such as Term Return of Premium Plans give back the premiums paid, upon the policyholder surviving the total policy terms.
8. Can I get an additional accidental death benefit on my term insurance plan?
Yes, there is an option to attach an accidental death benefit Rider to your term coverage for extra protection if you die due to an accident.
9. How important is the duration of coverage when it comes to term insurance?
Term life insurance has an important factor and that is length of coverage. It is meant to align with your broader future objectives and obligations, enabling you and your loved ones to have a solid financial cushion when critical moments arrive.
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Written By: Sahil Singh Kathait
A boy-in-squares bagging escapades of switching streets in groove & sensing musical airy-notes from 6 1". Under wayed nyctophile sketching the walls of life from the panorama of anime.
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