Is It Good to Buy a Term Insurance Plan in 2021?
Updated On Jul 04, 2021
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Gone are the days when an individual had to complete paperwork and pay a commission after waiting for hours in the insurance provider’s office to get his/her desired life insurance policy. In 2021, when the pandemic stills persist, you can simply buy a term life insurance policy through your phones while being safe at home. Moreover, you can easily compare different policies to choose the best plan for yourself online. The following article focuses on the term life insurance plan and its various benefits, which will surely convince you to buy one.
What is a Term Life Insurance Policy?
A term insurance policy is a life insurance contract for a specific duration between the policyholder and the insurance provider. The appointed beneficiary would get the death benefits if the life assured dies within the policy duration. However, unlike other life insurance policies, a term life insurance plan doesn't offer maturity benefits to the life assured if he/she survives till policy completion. This has made the plan cheaper than the rest of the policies. Hence, it can be concluded that a term life insurance policy is an ideal plan that offers high sum assured at affordable prices.
Benefits of a Term Life Insurance Policy
Here are some benefits that are offered under a term life insurance policy.
1. Simple Terms and Conditions
As mentioned above, a term insurance plan offers death benefits after the death of the life assured for which he/she has to pay regular premium instalments to keep the contract active. Such simple terms and conditions are easier to understand and make it favourable among the masses.
2. Higher Sum Assured
Due to its simple nature, a term insurance plan is much lighter on the life assured’s pockets compared to other kinds of life insurance policy. That is why many insurance providers offer a higher amount of sum assured to a term life insurance policyholder. Moreover, you can further increase the amount of coverage at low premium prices if you buy a term insurance policy through the online postal or websites at a young and healthy age.
3. Tax Benefits
Certain tax benefits on the premium paid on a term insurance policy of the life assured or a policy purchased on behalf of his/her spouse or children are offered under Section 80C of Income Tax Act. You can save up to Rs. 1.5 Lakhs each year.
Factors to Consider While Purchasing a Term Life Insurance Policy
If you are convinced with the benefits mentioned above and plan on buying a term insurance policy, you should consider certain factors while purchasing a plan.
1. Estimate the Coverage
You should carefully assess your family needs and future aspirations to calculate an appropriate amount of sum assured that will be enough to ensure the continuation of your family’s current lifestyle while providing assistance to fulfil their future goals.
2. Decide the Policy Duration
The right policy duration is an important factor which must be considered while purchasing a term life insurance policy. It is wise to choose a suitable period which is neither too short nor too long.
3. Rider Benefits
Rider benefits are add-ons that offer financial protection for different situations. Some of the rider options include critical illness cover, accidental death cover etc. It is advisable not to choose unnecessary rider options to keep the cost of the policy low.
A term insurance policy can be an excellent financial decision if done right. Therefore, it is advisable to compare the terms and conditions offered by different insurance providers to choose the most suitable one according to your needs. You can even consult a financial advisor or an insurance agent to help understand them better.
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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.