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Term insurance plans are considered basic necessities in today's world. Term insurance plans are the fundamental policies that secure the financial future of one's family and their loved ones. As any unforeseen event may occur to any one of us any day, having a term insurance plan can help us with the ease of mind for a financially secure future for our loved ones.
Buying a term insurance plan is a great choice for those who are seeking long-term coverage of their life and health. Term insurance plans roll out death benefits in the event of an uncertain demise of the life insured, which shall be paid to their beneficiaries.
Apart from life cover, a term insurance plan has several other benefits like low rates of premiums, tax benefits, rider benefits, etc. Let us explore these advantages below:
Term insurance plans offer a comprehensive life cover, which protects the policyholder till the age of 85 or even more. In the case of families dependent on a single breadwinner, term insurance plans are perfect for providing them with economic means to live their lives securely.
Term plans are very affordable, basic insurance plans meant to cover an individual and his/her loved ones in case of illness, injury or death. What sets term insurances apart is that these policies are extremely affordable compared to other insurance options as the life insured does not have to pay hefty premiums. And they offer a very high amount of sum assured, which is generally 15 to 20 times the annual salary of the policy owner. One can also reduce the cost of their premiums by buying term insurance at a young age when health risks are less. Buying an online term plan will also cost you less premiums due to the absence of a broker or intermediary.
Term insurance plans also offer additional benefits, which are called riders. These riders can be availed separately from the original plan and provide additional cover to the life insured. The most common riders are accidental death/disability riders and critical illness riders. While an accidental death benefit rider would entitle the dependants with an additional amount of money in case of death due to an accident of the life insured, the disability rider would similarly roll out an additional sum to meet the medical expenses of the life insured. The critical illness rider ensures that in the event of any critical illness to the life insured, his/her medical treatment expenses are met. All these riders offer the added advantage of additional lump sum payouts above the basic plan.
Term plans offer the life insured to choose the manner of payment that shall be made to his/her family members in the event of their untimely death. The life insured can either select a lump sum amount to be paid or as monthly instalments, which shall be paid to the nominee for a certain number of years. Some term plans also offer a lump sum amount along with a monthly income scheme for the dependants. Having this flexibility is quite an advantage for life insured, as they don't have to worry about any existing loans or debts that may be forced upon their family members in case of an untimely death.
Term plans do not offer any maturity benefits to the policyholder; they only cover the individual in case of an untimely death within the policy tenure. However, these policies do offer a return of premium option, which the policyholder has to select when buying a term insurance plan. With this option, the policyholder will be entitled to receive all the premiums paid towards this policy if he/she survives the maturity period. However, the return of the premium option would charge a higher rate of premium from the life insured.
Term insurances also offer tax benefits. Under Section 80C of The Income Tax Act, 1961, the premiums paid towards the policy are exempted from tax, up to an amount of Rs. 1.5 lakh a year. The death benefits payable to the beneficiaries are completely exempted from Income Tax under Section 10(10D) of the said act.
Buying term insurance is a sound decision to safeguard your family's future interests, but it is necessary to remember that choosing the right plan is key here. The life cover and other benefits should be adequate in looking after the financial needs of your family. It is advisable to look for term plans online and compare to know which one suits you the best.