Term Insurance Benefits
A term insurance policy is a risk protection plan which can act as a shield for family members of the life assured in case of an unfortunate demise of the life assured during the policy tenure. Term insurance can help an individual ensure financial security for their family from the uncertainties of life. Under a term insurance policy a sum assured known as death benefit in the event of an unforeseen demise of the life assured during the policy tenure. Term insurance policy provides extensive coverage for an affordable premium. One can also avail tax benefits by investing in a term insurance policy.
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Term insurance acts as a cushion for family members of the policyholder in the absence of a policyholder. A Term Insurance plan helps your family become financially independent. It is a type of policy that offers the sum assured to the family members in an event of the sudden demise of the policyholder during the policy tenure. This policy promises to offer you high insurance coverage at an affordable premium.
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How Term Insurance Benefits Policyholders?
Term insurance is a life insurance policy type that acts as a financial cushion for family members of the policyholder in the event of the death of the policyholder during the policy term. A term insurance policy financially supports the family members of the life assured and makes them independent for their future. In the event of the unfortunate death of the life assured, a term insurance policy provides the family members in an event of sudden demise of the policyholder during the policy tenure. This policy promises to offer you with high insurance coverage at an affordable premium.
Top Benefits of Term Insurance
Following are benefits that you can enjoy if covered under a term insurance policy:
1. Sum Assured Payout: Term insurance is a type of life insurance policy that offers the sum assured to the family members in an event of the sudden demise of the policyholder during the tenure of the policy. This policy is said to offer you high insurance coverage with a minimum premium amount.
2. Availability of Whole Life Cover: Some of the term insurance companies offer term insurance benefits for the whole life that is some of the insurance companies offer whole life cover under term insurance. This means the policyholder is entitled to life cover up to 99 years of age.
3. Critical Illness Cover: Term insurance plans offer a critical illness cover wherein the insurance plan covers the critical illness listed in the insurance company’s terms and conditions. Term insurance does not have an inbuilt critical illness cover an applicant can opt to purchase the critical illness that can be very helpful. This additional cover provides financial help for the medical expenses that have been incurred.
4. Budget-Friendly: Term insurance is known for providing life cover at affordable premiums. Term insurance plans are considered 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 the best favorable sum assured amount that helps the applicant to ensure that there is enough financial support for his/her family member after the applicant's demise.
5. Tax Benefits: 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 the premium amount.
6. Customisation: Term Insurance Riders are additional benefits that an insurance company offers at the time of purchasing the life insurance plans. They are purchased with the plan increasing the premium and they enhance the life cover. Some of the common riders offered by the insurance companies are Critical Illness Rider, Accidental Death Benefit Rider, Accidental Total or Permanent Disability Rider and Waiver of Premium Rider. With these optional additional riders being offered a person can make better decisions by choosing the best plan and rider offered with it.
Top Benefits of Buying Term Insurance in Early Years of Life
The list of major benefits of buying term insurance early in life include:
- Low Premium Amount: When an individual buys a term insurance plan early in their life they get benefited with a low premium amount for the policy purchased. It must be noted that the premium cost for term life insurance policies increase with the passing age. For instance, if a person buys a term insurance plan with Rs. 1 Crore coverage that covers up to 75 years of age, they would be required to pay Rs. 6,000 at 25 years of age, Rs. 10,000 at 30 years of age, Rs. 30,000 at 45 years of age as an yearly premium. Since at a young age, individuals have less responsibilities and good health, buying health insurance is highly recommended in the early years of life.
- More For Less: On the purchase of a term insurance policy, the premium amount is locked for a lifetime. In simple words, the term insurance policy premium remains the same during the policy term. Therefore, buying term insurance early in life helps in saving a significant amount over a period of time.
- Early Coverage For Loved Ones: By buying term insurance early in life, you will be able to financially cover your loved ones as well. While you may not feel the need to cover your family members financially in the early years of your life, you may be leaving them in a vulnerable state in case an unfortunate incident results in your death. Your family will have to financially struggle a lot as well as compromise on their life goals in case that happens. On the contrary, an early and informed move in your 20s or early 30s will help you keep your family members out of financial hardships and even continue living their life peacefully even if you are not there to take care of them.
- Early Tax Benefits: One of the key reasons people buy term insurance is tax benefits. You too can reap benefits of tax benefits under different Sections of the Income Tax Act, 1961. In other words, early purchase of term insurance can not only provide early financial stability, but also early tax benefits. Note that a term insurance policyholder, irrespective of their age, can avail benefits of tax deduction under Section 80C, Section 80D, and Section 10 (10D) that vary in their benefits.
Term Insurance Benefits That Make It a Must for Everyone
Below mentioned are some of the crucial benefits of term insurance that make it significance in the life of every individual, irrespective of their age, gender, income, lifestyle and more aspects like such:
- Financial Protection: Term insurance is one of the best ways to gain financial protection. With an ideal term insurance policy by one’s side, they can ensure that their loved ones are financially secure and can lead a life without facing shortage of finances even if they are not present to provide for their family’s needs any more.
- Peace of Mind: Term insurance policies come with financial security. What they also bring in addition is peace of mind. Even if the sole earning member of a family passes away, the surviving family members are free from the stress that comes with lack of money. The family left behind can go ahead with living their life with peace of mind and no concerns in mind.
- No Financial Hardships: One of the biggest impacts after the death of the sole earning family member’s death is financial instability. A term insurance policy can resolve the concern without any hassle. With an ideal term insurance by their side, the life assured can make sure that their loved ones do not have to struggle to earn money or face hardships in even paying the smallest of bill amounts.
- A Life Without Compromises: Term insurance helps one live life without any compromises. By buying a term insurance policy, an individual can bring in their family a life without compromises even in the case of the unfortunate death of the main earning member. Term insurance benefits ensure that the family members have a significant amount of money as assured under the plan and lead a life where they do not have to make compromises with their life goals, dreams and various aspirations.
Benefits of Term Insurance
- ICICI Prudential
- Aditya Birla
- PNB MetLife
- Bharti AXA
- Edelweiss Tokio
- Bajaj Allianz
- Canara HSBC OBC
- Tata AIA
- Future Generali
- Star Union Dai-ichi
- Ageas Federal
Disclaimer: InsuranceDekho does not endorse, rate or recommend any particular insurance company or insurance plan.
FAQ About Term Insurance Benefits
What are the major benefits of term insurance?
The term insurance offers several benefits to policyholders such as:
- A substantial insurance cover at an economical price
- The sum assured amount received by the family is tax-free.
- Tax benefits as per the section 80C up to Rs. 1.5 Lakh on the premium paid
- Offers peace of mind by providing financial support to your family in your absence.
Can I raise multiple claims for term insurance?
Yes, you can purchase multiple term insurance plans and raise claims from them which their insurance companies will have to honour, in case of your death during the policy term and if you have informed your new insurance company about your existing insurance policy while buying the new term plan.
Does the term insurance plan offer critical illness cover?
Yes, you can get coverage for critical illness cover under the term insurance plan as per the terms and conditions of the company. However, term insurance does not come with an inbuilt critical illness cover but you can purchase an optional plan to get financial help for the medical expenses of critical illness.
What If I do not die within the policy period of the term insurance?
The term insurance plan terminates at the end of its tenure, therefore, you may not be eligible for any coverage if you die after the policy term. However, some term insurance plans also come with survival benefits based on the provisions offered by the insurance company, which your family can utilize in such a situation.
What kinds of optional benefits are available under term insurance?
The term insurance offers and allows you to pick different benefits as per your budget and needs such as waiver of premium benefit, accidental death benefit, protection against critical illnesses and so on.
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