Term Insurance and Its Important Benefits
Updated On Aug 22, 2021
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A term insurance plan is a kind of life insurance policy which offers coverage for a specific time period. It is an insurance plan, wherein the sum assured is payable to the nominee in case the policyholder dies during the policy tenure. This plan is specifically designed to protect the future financial needs of the policyholder’s family or the nominee in case of demise of the policyholder. Purchasing a term insurance plan is advantageous as it ensures that one can plan for the financial safety of their family members even in their absence. Purchasing this plan is the minimum one can do to ensure financial stability for their family members. It would offer you a financial safety net and to your family members in the event of your sudden demise. It provides a death benefit in the form of a sum assured to your nominees to pay off any immediate debts or they can even save it for their financial requirements in the future. To understand a term insurance plan in detail, it is significant to know about the benefits offered under it.
Benefits of Purchasing a Term Insurance Plan
Here is a list of important benefits of purchasing a term insurance plan:
One of the biggest benefits of purchasing a term insurance plan is that it provides a higher sum assured at the cost of lowest premium amounts. The premiums payable towards any term insurance plan is less in comparison to any other type of life insurance policies. Therefore, the policyholders can choose a higher sum assured at a comparatively lower premium amount. Moreover, the premiums payable here remain unchanged for the remaining plan tenure.
Another most prominent benefit of a term insurance plan is that it offers tax benefits towards the premium payable upto 150000 as per section 80C of the Income Tax Act. The benefit offered effectively helps you in reducing the tax burden Moreover, apart from this, in case you choose any health related riders, then you can receive further tax deductions under section 80D of the Income Tax Act.
The family members of the policyholders can make use of the lump sum term insurance plan benefits in order to meet the liabilities such as outstanding loans and other debts. Moreover, the remaining amount can be invested by them in other substantial and financial profit tools. In case your nominee requires a regular pay out, you can also look for a monthly payout option in order to offer coverage against their living costs. Moreover, a term insurance plan with a maturity benefit offers a source of income in your retirement years too.
Extensive Life Coverage
As there is no cash value involved, your whole term insurance premium covers the insurance cost. Therefore, one of the most remarkable benefits offered by a term insurance plan is that it provides insurance coverage sufficient for all your requirements at a comparatively lower premium amount. Moreover, the premium payable by younger applicants is less and remains fixed throughout the duration of the insurance plan.
At the End
Due to the various term insurance plan benefits offered, these insurance plans have become a financial planning tool. In case, you are having any financial dependents, then you must safeguard them against any financial crisis in your absence.
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.