Term insurance plans are purely protection based insurance plans, where you can get extensive coverage in minimal cost. The nominee receives the entire sum assured of the policy, in the case of the death of the policyholder, in either a lump sum or in the form of monthly payouts as decided upon by the policyholder. This ensures that your loved ones can pay for their regular expenses as well as any big financial commitments such as mortgage payments, monthly instalments, and higher education. Here are the 5 benefits of term life insurance plans and why you should invest in one today.
- They offer protection at lower rates of premiums
One of the key advantages of buying a term life insurance plan is that they are simple and cost effective. They offer you the peace of mind of having security for your loved ones without burning a deep hole in your pocket in the form of sky-high premiums or hidden charges. Insurers can afford to provide such cost efficient plans as these plans do not have a maturity benefit. They simply expire if the policy period lapses and if the designated event does not occur.
For instance, Future Generali’s Care Plus is a, non-linked and non-participating, pure risk premium ,term life insurance plan. The plan offers two options— life cover and extra life cover.
Life cover provides guaranteed death benefit in case of death of life assured. In extra life cover you get the benefits of life cover plus a guaranteed additional lump sum benefit (Accidental Death Sum Assured) in case of death of life assured due to accident. You can choose either of the two options while deciding on the plan and your premium amount will vary with the option you have chosen. The maximum age for taking this plan is 65 years.
In both options- life cover and extra life cover- there is flexibility to choose lump sum payout, fixed monthly payout or a combination of both payouts as death benefit upon death of life assured. Additionally, you can choose to change any of the payout options during the policy term but before the occurrence of the insured event.
This plan also gives you the flexibility to choose the period of protection and the period of premium payment. You also have the option of returning the policy to the company within 15 days of purchase in case you disagree with any terms or conditions.
- Tax benefits of term life insurance policies.
Another major benefit of investing in a term life insurance policy is the tax benefit you can avail on the same. As per the Indian Income Tax Act, the premium amount can be claimed under section 80C, according to the provisions of Income Tax laws as amended from time to time. The overall limit of exemption under Section 80C can extend up to only 1,50,000 INR. Thus, you are eligible to get tax deductions for up to Rs 1.5 lacs in premiums paid towards life insurance policies.
You can claim deductions for premiums paid towards life insurance policies for themselves, your spouse and dependent children. Additionally, life insurance policies offer a tax-free death benefit to the nominee of the policyholder. Life insurance payouts whether it is the sum assured or coverage, received as a death benefit or upon maturity of the plan as a survival benefit, including bonuses is exempted from tax under Section 10(10D) of the Income Tax Act, barring certain exceptions as outlined by your policy.
- You can customize a term life insurance with riders.
Riders in life insurance policies are an attachment or an amendment to an existing policy that provides coverage in addition to the plan. Riders are designed to strengthen an insurance policy by providing additional benefits apart from a death benefit. Examples of riders that increase the coverage offered by your term plan include, accidental death benefit rider, critical illness rider and waiver of premium rider, amongst several others.
- Term life insurance policies can help you safeguard against liabilities.
In case of your untimely demise term life insurance policies help your dependents manage any liability payments that remain. The sum assured and death benefit obtained from your term life insurance policy can help pay for any loans and mortgage payments that remain.
- Term life insurance plans are simple.
An underrated advantage of term plans is that they are simple and easy to understand. Often when customers start exploring life insurance plans they are overwhelmed by the options available. Due to marketing and the appeal of certain plans to offer savings and investment at the same time, customers sometimes feel lost. To understand which policy works best for your particular needs & how, you can visit our website or talk to our trusted and experienced advisors.
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