You set countless financial goals for your family and build financial strategies to accomplish them. However, the fulfilment of these financial goals could come to a halt in your absence. Since the ambiguities of life are inevitable and highly unpredictable, it is wise to guard your family’s financial security. One of the best means to accomplish this is to buy term life insurance, a financial decision that guarantees a shedload of benefits.
Before diving into the list of benefits you can enjoy with this policy, it is important to answer one fundamental question, “what is term life insurance?”.
Term plan is an excellent way to protect you and your loved ones financially, where after an unfortunate event, your beneficiaries receive benefits and these are pure insurance policies that are highly affordable and simple.
8 Benefits That Can Be Life-Changing
Below mentioned are some of the most sought-after term insurance benefits.
High sum assured at affordable premiums One of the primary benefits of Term Insurance is the availability of large covers at relatively affordable premiums. Moreover, the earlier you buy it in life, the lower the premium. In addition, you can find numerous term insurance premium calculators that do the math for you, making the process hassle-free.
Easy to Comprehend While buying a policy, it can be challenging to understand the insurance-specific terms, but Term Insurance plans are reasonably easy to understand. In fact, simplicity is one of the impetus for its growing popularity. Term insurance is a pure life cover that focuses on offering your loved ones the sum assured in case of an eventuality. All one needs to ensure is that the premium is paid on time.
High Coverage A term plan provides a significantly higher sum assured, allowing you to leave enough money for your family and dependents to avoid financial difficulties in your absence. Compared to traditional, ULIP, or endowment policies, term insurance provides around 60 times the coverage.
Income Tax Benefits Not only the premiums you pay for a term plan are tax-deductible, but the payouts also come with tax exemptions. The three tax exemptions under the Income Tax Act, 1961, include: Section 80C: You can claim a deduction of up to ₹1.5 lakh for certain investments and purchases, including the premium paid for term plans. Section 80D: For premiums paid towards health-related coverage like critical illness riders, you can claim deductions up to ₹25,000. Section 10 (10D): While claiming the payout of a term plan, you can get a tax exemption on the entire amount.
Multiple Death Benefit Payout Options In your absence, your financial liabilities like loans or debts may fall on your family. Here the different payout options of the term plan play a critical role. In case of your demise, your beneficiaries may get a lump sum amount to help them manage the liabilities described above.
Add-on riders to strengthen the insurance A rider is an optional add-on cover to the base insurance that gives additional benefits. You can choose to enhance the terms insurance benefits by adding riders like accidental death, permanent disability, waiver of premium, etc., by paying a nominal additional premium. The advantages are fixed against an insured event because most of these riders are defined-benefit plans.
Critical Illness Coverage Illnesses can occur during any phase of life and receiving the necessary treatment can drain all your savings. Though benefits of term insurance only offer life cover, you can choose to get critical illness coverage via riders and pay for the treatment without spending up your savings.
Return of Premium Option A pure term plan does not provide any benefit on maturity. However, you can get term insurance with maturity benefits if you opt for the return of premium option. Though you pay higher premiums for this option, you also get back the total premiums if you survive the policy tenure. But do note, the total premium you get will not include any tax, modal amount, or rider premium paid.
The numerous term insurance benefits make it a valuable part of your future planning. If you have financial dependents, shielding them against any monetary crisis in your absence becomes more accessible with such instruments.