What is Term Insurance?
Published On Sep 26, 2021 5:00 AM By Kanika Wadhwa
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A term insurance plan is one of the purest forms of life insurance available that provides comprehensive financial safety to your loved ones against the uncertainties of life. Based on the term insurance plan you purchase, your loved ones would receive sum assured or life coverage in the event of your unforeseen demise within the plan duration.
Salient Features of Term Insurance Plans
Some of the salient features of a term insurance plans are as follows:
Life CoverageIn case you are the only bread earner of your family, then you can protect your family members against any financial uncertainties that they may have to face due to your untimely demise during the plan duration by buying a term insurance plan.
Must Read: What to Do With Your Term Life Insurance at the End of Term?
Low PremiumIt is difficult to sustain a high sum assured in case the premiums are not economical. A term insurance plan most of the time offers coverage against the risk of untimely demise and thus the premiums charged are quite low as compared to other life insurance plans.
Different Types of PlansA term insurance policy comes in different types basically to suit the coverage requirements of different people. Therefore, you are given the option to choose a variant which meets your individual insurance needs.
RidersThe insurance company offers you the option of various insurance riders in order to extend the plan coverage. Riders or add-ons are basically the additional benefits that can be included to your standard term insurance plan at the cost of an additional premium amount. Some of the riders commonly availed by the policyholders are accidental death benefit rider, critical illness rider, term rider, terminal illness rider, etc.
Tax BenefitsA term insurance plan offers the policyholder with dual tax benefits. As per section 80C of the Income Tax Act, the premiums that are payable towards the insurance policy are allowed tax deduction of up to Rs 1.5 Lakh per annum. Also, the death benefit that the nominee receives is tax deductible as per section 10(10D) of the Income Tax Act.
Benefits of Term Insurance Plans
Some of the benefits of term insurance plans are as follows:
- The premiums payable towards a term insurance plan is quite low, thus allowing you to avail a considerable sum assured at an affordable rate. In case, the sum assured is high, then you can assure adequate financial support towards your family members.
- The tax benefits offered under the term insurance plan helps you in lowering the tax liability. It helps you in saving your money as per section 80C of the Income Tax Act, while at the same time ensuring complete policy coverage.
- Under a term insurance plan, the policyholder receives unparalleled coverage, which is necessary to offer protection against premature death and the financial instability suffered afterwards.
Also Read: Types of Life Insurance Plans in India
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.