There are many term insurance benefits that make it an excellent investment to secure the financial safety of your family.
Affordable premiums: One of the major benefits of a term insurance plan is the affordability of premium. It is possible to get a cover of Rs. 1 crore without spending a huge amount. Term insurance premiums purely reflect the risk of covering the life of the policyholder. For Non-smokers, premiums are lesser. Insurance companies also charge lesser premiums for healthy policyholders. Women policyholders typically enjoy lesser premiums than men. All these factors make it possible for people to opt for higher covers without it breaking the bank.
Policy Tenure: The tenure for a term insurance plan lasts from the age at which the policy was purchased and continues till the age specified in the policy. The term insurance policy ends when the policyholder crosses that specified age. For example, if the policyholder is 30 when he buys a term plan and the coverage under the policy is till the policyholder reaches 80 years, the policy duration is 50 years. Buying a term plan at a young age will ensure the premium is kept low and the sum assured is high.
Riders: Riders provides an additional coverage that comes along with a term plan. These cover scenarios such as accidental death, disability, critical illnesses etc. These riders have additional premium that has to be paid over and above the term insurance premium. However, they provide additional benefit when the given conditions are met. For example, if a Critical Illness Rider is opted for and the policyholder is diagnosed with one of the specified illnesses, then he will receive a payout for meeting the condition covered under the rider. The rider benefit, like the base policy benefit, will have to be decided at the inception of the policy which determines the min/max coverage term & benefits of the rider.
Online Term Insurance Policies: One of the biggest advantages of a term insurance plan is that these policies are easily available online. It is convenient to buy them directly from the insurance company’s website or with the support of an insurance web- aggregator or form any other insurance intermediary. Once the onboarding formalities are completed, the insurance company issues the policy document.
Tax Benefit: Term plans are counted as life insurance plans and get a tax deduction for premium paid under Section 80C of the Income Tax Act, 1961. This deduction is limited to Rs. 1,50,000 and it covers premium for self, spouse and dependent children. If the policy is taken for anyone else, a deduction will not be available. This deduction will only be allowed if premium paid is less than 10% of the sum assured. Another point to remember is that any benefit received under a term insurance policy is exempt under Section 10(10D) of the Income Tax Act. This includes payout for a term insurance rider as well. This guarantees the financial security of your family since no tax will have to be paid on term insurance benefits. The benefit can be wholly used for the family’s finances.