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Top 5 Features of Term Insurance

Discover the top 5 features of term insurance that ensure your family's financial security. Make an informed decision for a brighter future now.

  • 6,734 Views | Updated on: Feb 27, 2024

Term plans are the most sought-after insurance policies due to the various advantages offered by them. Many get a term policy just for pure life cover, available at an affordable price.

Are you considering getting an insurance plan as well? It is time to dig deep and look at the features of a term plan and some reasons why you should opt for it.

Features of Term Plan

When it comes to financial planning, securing the future of your loved ones is of utmost importance. This is where a term plan plays a crucial role. Here are some major term insurance features that you need to know about:

Affordable Option amongst Various Policies

A term plan is the most affordable plan among the several life insurance options available in the market. You could end up adding riders and get a larger sum assured, but the premium quote remains to be less expensive when compared to policies like money-back insurance, whole life policy, etc.

Easy Mode of Purchase

The mode of purchase of plans has become even easier, where you can get a policy from the comforts of your home. Online term plans are the most popular amongst the masses as they are simple and do not contain a lot of elements that you have to understand. In the case of confusion, you can fill out a lead form on the insurer’s website, and the customer care executive will guide you through the entire process of getting an online policy.

High Sum Assured

Term plans promise a high sum assured at an affordable rate when compared to other plans. This sum assured, or death benefit helps in securing your family members and providing them with financial stability. You can go on to get a suitable amount of death benefit based on the needs of your family and any liabilities you may have to pay off.

Rider Benefits

Insurance riders are additional components that you can combine with your term insurance policy to increase coverage. Some of the commonly bought riders are critical illness riders, accidental death riders, permanent disability riders, waivers of premiums, etc. Term plans allow you to add these riders and still get an affordable premium.

Flexible-Premium Payment Options

Term plans offer you flexible premium payment options, which are monthly, quarterly, half-yearly and yearly. These options enable you to pay as per your income cycle.

Importance of Term Insurance

Getting an insurance policy is considered by most, but due to some reasons, many stray away from it or end up investing somewhere else. But while looking at policies, many forget that these plans secure your life and give financial stability to your family. So let’s look at the reasons why you should opt for a term plan:

Safeguards Your Loved Ones

Term insurance provides pure life cover to you and promises a death benefit for your loved ones. This death benefit is a lump sum or a regular payout given to your family to stabilize their future. You can also choose the sum assured while buying the policy and account for the cost of education, liabilities, etc., to cover your family.

Eliminates Stress

When you know that your family is taken care of, it reduces the stress from your life considerably. With the sum assured available to pay off any loans and debts you may have, your family will be able to live independently. Hence, a term plan takes some of the weight off your shoulder.

Tax Benefits

You are shelling out a part of your income to secure life insurance, but some extra perks that you get with it are income tax benefits. You can claim the premiums paid towards the policy under Section 80C of the Income Tax Act, 1961. Another tax benefit for your family is that the sum assured can also be claimed under Section 10(10D).

What are the 3 Benefits of Term Insurance?

While there are various types of life insurance available, term insurance has gained popularity due to its affordability and simplicity. Let us now dig deeper and explore the three key term insurance benefits that make it a valuable investment for individuals and families.

Affordability

Term insurance provides a cost-effective way to secure your family’s financial future. The lower premiums make it accessible for individuals with different budgetary constraints.

Financial Protection

The primary benefit of term insurance is the financial protection it offers to your loved ones. In the event of your demise within the policy term, the death benefit ensures that your family can cover essential expenses, pay off debts, or fund future financial goals.

Flexibility

Term insurance policies are highly flexible, allowing you to customize the coverage based on your specific needs. You can choose the policy term and coverage amount and add riders to tailor the policy to your requirements.

What is the Main Purpose of Term Life Insurance?

The main purpose of term life insurance is to provide financial protection and peace of mind to your loved ones in the event of your untimely demise. It serves as a safety net, ensuring that your family’s financial obligations, such as mortgage payments, educational expenses, or daily living costs, are taken care of, even when you are no longer there to support them.

Also Read: What is Term Insurance?

What is the Biggest Advantage of Term Life Insurance?

The biggest advantage of term life insurance is its affordability. The premiums for term insurance policies are generally lower compared to other types of life insurance. This affordability allows individuals to acquire higher coverage amounts at a reasonable cost, providing comprehensive protection for their families.

Why is Term Cover Better than Whole Life Insurance?

In recent years, term cover has gained significant attention due to its distinct advantages over whole-life insurance. Term cover is often considered more suitable than whole life insurance for several reasons:

Lower Premiums

Term insurance premiums are typically lower than whole life insurance premiums. This affordability makes term insurance a more attractive option for individuals looking for cost-effective coverage.

Focused Protection

Term insurance policies are designed to provide pure life insurance coverage without any cash value accumulation or investment components. This ensures that the policy’s primary focus is on providing financial protection to your beneficiaries in the event of your demise.

Flexibility

Term insurance policies offer greater flexibility, allowing you to customize the coverage and policy term according to your specific needs. You can choose the duration of coverage that aligns with your financial goals and, if needed, convert or renew the policy based on changing circumstances.

Wrapping Up

Term insurance provides a straightforward and affordable way to secure your family’s financial future. With its comprehensive coverage, affordability, flexibility, and focus on providing protection, term insurance remains a popular choice for individuals seeking peace of mind and financial security. By understanding its features and benefits, you can make an informed decision to safeguard your loved one’s well-being in times of uncertainty.

Key takeaways

  • A term plan is the most affordable plan among the several life insurance options available in the market.
  • Online term plans are the most popular amongst the masses as they are simple and do not contain a lot of elements that you have to understand.
  • Term plans promise a high sum assured at an affordable rate when compared to other plans.
  • Insurance riders are additional components that you can combine with your term insurance policy to increase coverage.
  • Term plans offer you flexible premium payment options, which are monthly, quarterly, half-yearly and yearly.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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