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What Does Term Insurance Mean?

Published On Jul 24, 2021 10:00 AM By Yamini Sharma

Have you been looking for ways to secure the financial future of your loved ones? Have you been advised to buy term insurance? If so, know that it would be important for you to discover the term insurance meaning before actually investing your money. 

Term Insurance Meaning 

Term insurance is a life insurance type. It is basically the purest form of life insurance that helps you financially secure your loved ones during the uncertain times. A term insurance policy can help you keep your family financially secured even if you are no longer there to take care of them. 

Term Insurance Features 

Some of the key features of term insurance are:

  • Provides life cover against eventualities
  • Provides financial protection against critical illness 
  • Covers against accidental illness or disability 
  • Helps in extending cover through riders 
  • Ensuring tax benefits 
  • Allows multiple payment options 

Who Should Buy Term Insurance?

Term insurance is an ideal choice for any individual who has started earning. It is advisable to buy term insurance if you have financially dependent family members. All in all, whether you are in your 20s, 30s, 40s, 50s, or approaching the retirement age, it is important to invest in term insurance so that your loved ones are financially safe and do not face any financial hardships in case of your untimely death. 

Factors to Look for Before Buying Term Insurance

Some of the prime factors you should look for before buying term insurance include:

  • Financial needs and requirements of you & your family 
  • Term insurance policy premium 
  • Claim settlement ratio of the insurance company
  • Optional riders that could be added to your base term plan
  • Availability of online premium payment option 

Some Frequently Asked Questions About Term Insurance 

Q1. What is term insurance premium?

Term insurance premium is the amount one has to pay to the life insurance company for the financial coverage. It must be noted that the life insurance company offers financial coverage in exchange of the term insurance premium. Moreover, note that term insurance premium can be either monthly/quarterly/semi-annually/annually.

Q2. What is term insurance rider?

Term insurance riders are add-on benefits that come with term plans. These riders are of immense help in letting one avail extended benefits with basic life cover.

Q3. How much term insurance do I need?

According to the experts, the term insurance sum assured amount should be at least 10 times of your annual income. It must be noted that 15 to 20 times is always a better choice to opt for. Before making a policy purchase, one must calculate their term insurance cover as per their need or calculate the premium. 

Q4. What are the tax benefits associated with term insurance?

Under term insurance, one can avail tax deduction on their term insurance premium up to Rs. 1.5 Lakh according to Section 80C of the Income Tax Act, 1961. Moreover, if one opts for critical illness benefits, they can avail tax benefits up to Rs. 25,000 under Section 80D.

Q5.  Is there anything that can affect my term insurance premium?

Some of the prime factors that affect term insurance premium are age, annual income, amount of coverage, insurance coverage tenure, health condition, whether one is a smoker or not, etc. 

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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.

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