Summary:
Term insurance plans come with many benefits, but three of the most important reasons are discussed in this post. Keep reading.
Term life insurance policy comes with a single aim to provide the policyholder’s family with a death benefit in the event of their untimely death. If you are considering buying your first life insurance policy, a term plan should be the first on your list. Let’s look at three reasons that make term plans a must-have in your insurance portfolio.
Compared to other life insurance policies life insurance policies such as endowment plans or life insurance plans that come with a dual benefit of death and maturity coverage, term plans only provide the death benefit. This means the beneficiary only gets the sum assured in case of the policyholder’s death during the set term period. While you must do away with the maturity benefit, it also translates into lower premiums, making it affordable
Term plans are the purest life insurance policies as they only give the death benefit. While it means lower premiums, it also results in more advantages for the policyholder. Some of the significant benefits of pure life insurance plans are-
1.Most Affordable Way to Secure Your Family’s Future2.Pure Life Insurance
● High Cover
You can get a comparatively high cover for a low premium as the policy only provides a death benefit. Most financial experts recommend having at least one term plan in the portfolio for this reason. You can always get other life insurance plans as an add-on, but a term plan serves the true purpose of a life insurance policy -that is, to secure your family’s future.
● Easy to Understand
Being a pure life insurance plan, this policy is free from any complexities involved in other plans such as endowment or ULIPs. For instance, in a ULIP plan, you will also have to pay attention to the portion of the premium going towards investment. Since the plan comes with a single benefit, it is an excellent step for first-time insurance policy buyers.
● Tax Benefits
While all life insurance policies provide tax deductions up to Rs 1.5 lakh per year under section 80C, the term plan also offers a tax exemption on the death benefit received by the beneficiary under section 10 (10D). In a dual-benefit policy, only the death benefit is tax-exempt, whereas the maturity benefit received is taxed as per applicable laws. However, maturity benefits in a standard life insurance policy may also be tax-exempt under some circumstances.
3.Flexible and Adjustable
While term plans are easy to understand and simple life insurance plans, they also have the flexibility to suit the insurer’s specific needs. For instance, the policyholder can add various add-on riders to enhance the coverage, including:
Critical Illness Benefit Rider: In this, a lump sum is given if the policyholder is diagnosed with a critical illness such as cardiovascular disease, kidney ailment, etc.
Permanent Disability Rider:
The policyholder receives a lump sum in case of a permanent disability.
Accidental Death: In this, the beneficiary receives the death benefit and an extra lump sum in case of the policyholder’s death due to an accident.
Apart from this, terms insurance policies also offer flexibility in terms of premium frequency (monthly or yearly) or converting your term plan into an endowment plan while keeping your sum assured the same with extra premium. Choose the right term plan based on your needs and budget and secure your family’s future.
