All You Need to Know About Term Life Insurance

A term insurance is a type of life insurance policy that offers coverage to the policyholder for a specific time period in exchange for a premium paid by them. Under this insurance plan, a nominee receives a predetermined death benefit in case the policyholder dies during the plan term.

Need of a Term Life Insurance Plan

A person can choose to buy a term insurance plan for the below-mentioned purposes:

• For Peace of Mind

  In case, an individual is the sole breadwinner of their family, then by purchasing a term insurance plan he/she can assure the much needed financial safety of their family members even when they are not present.
  
  

• Taking Care of One’s Family Needs

  Under a term insurance plan, the nominee assigned by the policyholder receives a lump sum amount in the form of death benefit, which can be used by the policyholder to meet their long term goals and regular expenses in case of unforeseen demise of the policyholder.

Benefits of a Term Insurance Plan

Some of the key benefits that a person can avail by buying a term insurance plan are as follows:

• Nominal Premium

  The premium paid towards a term insurance plan offers coverage against unforeseen losses. It also means that no investment component is involved here. A policyholder does not get any form of payout in case he/she survives during the tenure of the plan. As investment component is not present, a term insurance plan can be availed at a significantly lower premium amount as compared to a whole life insurance plan, which comes with maturity benefit.
  
  

• Coverage for a Long Term

  A term insurance plan provides a higher coverage for a longer period of time for up to 99 years of age at lower premium.

• Tax Benefits

  The premium paid for term insurance plans are tax deductible as per section 80 C of the Income Tax Act up to a maximum 1,50,000 per annum. Moreover, the death benefit given to the appointed nominee by the insurance company is also tax exempt according to section 10(10D).

• Flexible Premium Payment

  A policyholder has an option to select whether the predetermined sum assured gets paid to the nominee in the form of equal monthly income payments, lump sum, or a combination of both.

• Add-On Protection

  A policyholder has an option to purchase a term insurance rider to receive an additional coverage over the standard insurance plan, according to their requirements. Some of the commonly opted riders are accidental death rider, critical illness rider and permanent disability rider.

At the End

Making an investment in a term insurance plan is the smartest way to protect the financial well being of one’s family members in case of any financial emergencies that could arise due to the unforeseen death of the policyholder. Also, they can avail the plan at a nominal premium and even opt to make premium payment on monthly, half-yearly or yearly basis.

Also read: Popular Online Term Insurance Plans in India

Top Term Insurance Buying Mistakes You Should Avoid

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.