Term Insurance with Limited Pay
Updated On Aug 28, 2021
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Term insurance is a pure life protection policy that provides significant insurance coverage at a lower premium. This plan acts as a valuable investment for the protection of your loved ones against the financial obligations that could arise in the absence of the sole breadwinner of the family.
What is the Meaning of Limited Pay in Term Insurance Plans?
A limited pay in term insurance plan is an independent protection policy that provides the policyholder with the advantage of paying the premium amount for a specific time period. This insurance policy ensures that the policyholder stays covered for a longer duration, even if they stop paying their regular premiums. One of the biggest benefits offered under this insurance plan is limited premiums and continuous protection.
Who Must Purchase This Plan?
These plans must ideally be bought by individuals who are not sure regarding their ability to pay premiums for a longer time duration or for whole plan tenure. Such individuals may wish to get their life covered for a long period, however, may not have an additional sum to pay the premiums in later phase. A limited term insurance plan is suitable for those people who have changeable working environments, unstable monetary states, flexible pay or are at retirement stage.
Advantages of Limited Pay Term Insurance Plan
Some of the advantages of a Limited Pay Term Insurance Plan are as follows:
Shorter Premium DurationIt is one of the major benefits offered under a limited pay term insurance plan that under this plan one is not required to pay the premium for a longer time duration. It provides the payment options for a limited period and an option of a predetermined period is also available under this plan. It is an ideal plan for people who wish to spend their retirement years without having to face any financial stress and burden.
Individuals with Short Career OptionThere are many individuals who are presently working as a freelancer, wherein the lifespan of work culture is generally short. Therefore, such individuals are more comfortable in going with a limited premium payment option rather than a regular premium policy.
Tax BenefitsIt is another great benefit that is offered under this plan. The policyholder receives tax benefits as per section 80C of the Income Tax Act. The insurance premium paid under a limited plan is higher as compared to a regular term insurance plan that leads to a maximum deduction of up to Rs 1.5 Lakh.
Don’t Miss InstallmentsIn case the premium duration is low, then the risk of missing out on paying any instalment is also less. As stated earlier, it decreases the chances of plan relapse, therefore, preventing the family members of the policyholder from losing the benefits.
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.