Taking care of their families is a priority for most people. You work hard every day to provide for your family and strive to make sure that their needs are taken care of. But what happens to them after your demise? Life is extremely uncertain, and no one knows what awaits them tomorrow. Accidents and illnesses are often inevitable aspects of life. Hence, you need to plan ahead. One of the most ideal ways of doing that is by investing in a term insurance policy.
Term policy is the purest and simplest form of life insurance. Such an insurance cover provides financial protection to your family at affordable premiums. By having term life insurance in place, you can be assured that your family will have a much-needed safety net after your demise. Term insurance policies provide life coverage for a specific number of years. If the policyholder passes away during the policy term, a lump-sum payout equal to the sum assured shall be paid to their family. To gain a better understanding of how this type of life insurance works, you first need to know about its important components, such as:
- Insurance Premiums: Policy premiums are the amount you have to pay to obtain a particular sum of insurance coverage. You can pay these premiums on an annual, half-yearly, quarterly, or monthly basis during the premium payment period.
- Add-on riders: Riders refer to additional optional covers that you may buy along with the base cover by paying an extra premium. Such riders provide added financial coverage for particular incidents.
- Death Benefit: Death benefit implies the assured sum that would be paid to your nominees in the event of your demise.
Features and Benefits of Term Insurance
Now that you know the prime components of term insurance, check out the top advantages of investing in such a policy:
- Affordable: Term insurance plans offer pure life insurance coverage. The payouts of a typical term plan are limited to death benefits, and as a result, insurers charge affordable premiums for these policies. Term insurance plans are an excellent option to safeguard the financial future of your family without having to pay costly premiums.
- Easy to buy: You can invest in a term insurance policy either online or offline as per your convenience and preference. In fact, such policies can be issued within moments as you make your purchase online. You just have to select a respectable life insurance provider, visit their website to explore term insurance policy options, use an online term plan calculator to determine the premium amount, and make your payment after submitting the required documents and details.
- Term plan with return of premiums: In case you are bothered about the no maturity benefit aspect of the term insurance policy, then you may always choose to invest in a plan that comes with a Return of Premium (TROP) facility. Term insurance with ROP provides payouts if the policyholder survives the policy term. Therefore, the premiums paid during the policy term are returned to the policyholder in this situation.
- Diverse types of coverage: Coverage options available for term policy are also dynamic. You can opt for level-term policies where the cover remains constant across the policy term. On the other hand, you may even invest in increasing term plans in which the sum assured increases over the policy term in a predetermined fashion, up to a particular limit.
- Tax Benefits: You can enjoy tax benefits with a term insurance policy in the form of both exemptions and deductions. Under Section 80C of the Income Tax Act 1961, premiums paid for a term insurance policy are eligible for deduction from the total income of the policyholder, up to ₹. 1.5 lakhs. As a result, investing in such a policy would reduce your tax liability. Moreover, as per Section 10(10D) of the Income Tax Act, 1961, the death benefits received under a Term Insurance policy would be tax-free, if the paid amount is at least ten times of the annual premium paid towards the plan.
Term insurance policies are a suitable investment towards making sure that your family will not be burdened financially after your demise. The payouts from such a policy can be used to meet the daily expenses of your family, pay off debts like home and car loans, fund the education of your child, and so on. With an online term plan calculator, you can figure out an ideal premium quote in just a few minutes, and subsequently buy such a plan through a reputed insurance provider’s website to be assured of your family’s financial security.