What Are The Benefits Of Term Insurance Plans?
Published On Mar 03, 2021, Updated On Apr 22, 2021
Table of Contents
- Benefits of Term Insurance Plans
- 1. Term insurance plan offers availability of cover for whole life
- 2. Term insurance plan offers sum assured payout
- 3. Term insurance plan offers availability of ‘Critical Illness Cover’
- 4. Term insurance offers availability of ‘Accidental Death Benefit’
- 5. Term insurance offers availability of ‘Return of Premium’ option
- 6. Term insurance is Affordable
- Term insurance plan offers tax benefits
Term insurance plans act as a financial shield for a policyholder’s family in case of any unfortunate eventuality. Term insurance plans promises to provide a sum assured amount to the policyholder’s family in case of unforeseen demise of the policyholder during the policy term.
Term insurance plans are affordable as they provide a substantial life coverage against the payment of a nominal premium amount. Term insurance helps the policyholder live stress-free by providing an opportunity for him to create an independent and secure future for his/her family. Other than term insurance being affordable, this type of insurance plan has many benefits. Let understand how term insurance can be beneficial for a person.
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Benefits of Term Insurance Plans
Following are the key benefits offered by a term insurance plan -
1. Term insurance plan offers availability of cover for whole life
One of the main benefits of purchasing a term insurance plan is that it offers availability of whole life cover. This means term insurance provides comprehensive life cover to the policyholder covered under the plan upto 99 years of age.
2. Term insurance plan offers sum assured payout
Term insurance plans promise to provide sum assured to the loved ones of the policyholder in the event of the sudden demise of the policyholder during the policy tenure. Term insurance deals with covering the risk of untimely death of a policyholder. In the absence of the policyholder in case of an unfortunate event, term insurance plans help the policyholder’s family become financially independent.
3. Term insurance plan offers availability of ‘Critical Illness Cover’
Critical Illness Cover is a benefit wherein the insurance plan covers the critical illness listed in insurance company’s terms and conditions. Term insurance plans offer availability for the critical illness cover. Although critical illness cover is not inbuilt in the insurance plan, an applicant can opt for it while purchasing the term insurance plan. The critical illness cover can help in providing financial support at the time of medical expenses that have been incurred/diagnosis of any of the listed critical illnesses covered by the insurance company.
4. Term insurance offers availability of ‘Accidental Death Benefit’
Accidental Death Benefit is a benefit wherein the insurance plan covers the death of policyholder caused by any accident. Accidental death benefit promises to provide an additional amount along with the death benefit. In case of accidental death of a policyholder, the family of the policyholder is provided with a sum assured payout along with the accidental death amount. This additional benefit is not included in the term insurance plan but an applicant can opt for accidental death benefit at the time of purchasing a term insurance plan.
5. Term insurance offers availability of ‘Return of Premium’ option
Term insurance plan promises to offer death benefits, this type of plan does not offer any maturity benefits. Term insurance plan offers availability of return of premium option wherein an applicant can opt for this benefit at the time of purchasing a term insurance plan. An applicant can avail the benefit of the return of premium option by paying higher premium and the premiums are returned after excluding taxes when the policy term ends.
6. Term insurance is Affordable
Term insurance is mostly known for providing life cover at a nominal price. Term insurance plans are the simplest form of insurance hence the affordable premiums. Premiums of term insurance are less than other life insurance plans. Affordable premiums allow an applicant to choose a best favourable sum assured amount helping the applicant to ensure that there is enough financial support for his/her family member after the applicant's demise.
Term insurance plan offers tax benefits
Term insurance plans are one of the categories of life insurance plans. Life insurance premiums qualify for tax deduction under Section 80C of the Income Tax Act. Also, as per Section 10D, the sum assured received on maturity of the life insurance plan is tax-free if the premium is up to 10% of the sum assured or the sum assured is at least 10 times of the premium amount.
Term insurance plans are very beneficial and can help in creating a family’s secured future. With a lot of options of term insurance plans available in the market the potential buyers can purchase a plan that best suits their requirements and fits in their budget.