Learn About The Various Benefits Of Term Insurance
Before buying something, especially something personal, one of the first things you’re bound to do is check the benefits of the product/ item. What are the advantages the product offers? How can buying the product/ item benefit you? You go ahead with the purchase only if the answers to these questions make sense to you.
Term insurance is a very personal purchase too. When you’re looking to buy a term insurance policy for your family, it is important to understand why term insurance is important, and the benefits of term insurance plan before you make the purchase.
So, what are the benefits of term life insurance? Let’s find out.
Term Insurance Benefits
1️⃣ Simplest Form Of Life Insurance
Term insurance is the simplest type of life insurance. It pays a fixed sum to your family in case you pass away during the policy tenure. All you need to do is pay all your premiums on time.
2️⃣ Affordable Premiums
The premiums of a term insurance policy are very low. An INR 1 Crore term insurance cover costs as low as INR 900 per month. So, for each rupee you pay towards the plan, your loved ones will get INR 1000 in return if you pass away while the policy is active.
3️⃣ Covers Death Globally
Another term plan benefits is that it covers death globally. Except for the single exception of suicide in the first year of buying the policy, a term insurance plan covers every type of death anywhere across the world.
4️⃣ Highly Customisable
Term insurance offers a lot of customisation options and allows you to design a policy that perfectly fits your and your family’s requirements. It allows you to customise how you want to pay your premiums, so for instance, if you want to pay off all your premiums swiftly (in 10-15 years or so) - you can pick the limited pay option. If you want your term insurance cover to automatically increase with time, you can choose the increasing cover feature. If you want your family to receive the claim amount in monthly instalments, and not in one go, you can customise that as well.
Riders are add-ons that will offer an additional payout under specific circumstances. You can opt for them by paying a certain extra cost and with no additional paperwork or medical tests.
For example, say Ishaan buys a waiver of premium on accidental disability rider with his term insurance. A few years later, Ishaan gets disabled because of an accident. With the waiver of premium rider, all future premiums under Ishaan’s policy will be waived. Meaning, he can enjoy the term insurance cover without paying any premiums under the policy.
There are a variety of riders you can buy with a term insurance policy - like a critical illness rider, accidental death benefit rider, waiver of premium rider, accidental disability rider, etc.
6️⃣ Financial Protection
A term insurance policy is one of the best ways to ensure your family remains financially protected should something happen to you during the policy term. When you're not around anymore, it can act as an income replacement and help secure your family’s future financial needs, without them compromising on their dreams and lifestyle.
7️⃣ 3 Year Claim Payout Guarantee
As per Section 45 of the Indian Insurance Act, 1938, if your term plan has been active for 3 consecutive years, your insurance company cannot question or deny any death claim under it for reasons of fraud, misstatement, or suppression of facts. So, your family will definitely receive the claim amount if your plan has been active for three years or more - if all your premiums have been paid diligently.
8️⃣ Dual Tax Advantages
Tax benefits for term insurance can be availed for both the premiums paid and the claim received under various sections of the Income Tax Act of India, 1961.
Under Section 80C, the premiums you pay per year for term insurance are eligible for tax deductions (up to INR 1,50,000). And, the term insurance claim your family will receive if you pass away during the policy term will be exempted from tax under Section 10(10D).
There are many benefits of term life insurance. It is one of the most affordable and simplest types of life insurance policies you are going to find in the market. It is the easiest way to secure your family and their future financial needs after you pass away. It is cost-effective, highly customisable, offers a variety of riders, covers death globally, and also offers dual tax benefits under the Income Tax Act of India, 1961.
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Got a question related to term plan benefits?
Post it on the Beshak Insurance Forum and get answers from insurance experts!
- Term insurance is the simplest form of life insurance. It is very cost-effective.
- Every type of death anywhere across the world is covered by term insurance except for suicide in the first year of purchasing the policy.
- One of the major benefits of term insurance is that it is highly customisable to fit your and your family’s preferences.
- You can also choose riders with your term plan - they will offer additional benefits under specific circumstances.
- A term insurance plan is one of the best ways through which you can secure your family’s future financial needs.
- As per Section 45 of the Insurance Act, insurers cannot reject a death claim under any life insurance policy after the first three years on any grounds whatsoever.
- Term insurance tax benefits can be availed under Section 80C and Section 10(10D) of the Income Tax Act of India, 1961.
Aakansha is a Content Ideator and Writer at Beshak. With her easy-to-understand content, she makes insurance simple for everyone. She comes with a strong background in finance and commerce and wants to help families make positive insurance decisions that are good for a lifetime.