A term insurance plan is a life insurance product that offers financial cover to the policyholder for a specific period of time. In case of the sudden demise of the policyholder, the entire sum of money is paid to their family members. A term insurance plan provides stable financial coverage to your loved ones in case of any mishap.
Advantages of buying a term insurance plan
Before you set out to buy a term life insurance plan, you should know the advantages of investing in a term insurance plan.
We have curated a detailed list of the advantages. Read along to know how you can plan better for your family’s financial future.
- Bigger life cover
A term life insurance plan provides you with a larger life cover at a higher premium. This is better than an endowment plan. For instance, a 30-year-old can get a term plan of 1 crore by paying a premium for 30-years. In the case of an endowment plan, it will not be suitable for a 30-year-old.
- High sum assured at an affordable premium
The main advantage of buying a term insurance plan is that it is affordable. In comparison to other life insurance plans, a term insurance plan is way more budget-friendly. Another great thing about a term insurance plan is that the earlier you invest in a term insurance plan, you will get to pay a lower premium.
Buying a term insurance plan online is better than buying offline because it helps you save the premium cost.
- Increase life cover
There are stages in an individual’s life where they need funds for their child’s education or marriage. The best thing about a term insurance plan is that it allows you the flexibility to increase the life cover at crucial stages of the policyholder’s life, such as when they get married or when they become a parent.
- Easier to understand
The second advantage of buying a term insurance plan is that it is easier to understand. A term insurance plan does not have an investment component, and also there are no difficult jargons related to the term plan.
- Several death payout options
If you are bombarded with paying EMIs for your new home or car and find it difficult to manage new policies, then opting for a term life insurance plan is a great option. In the case of the policyholder’s sudden demise, the family members tend to get financially burdened. To avoid such a challenging situation, you can avail a term insurance plan as it allows you to get a lump sum amount or monthly/quarterly/yearly payouts. This, in turn, can help your family to sustain themselves in a much better manner.
- Additional riders
The best thing about a term insurance plan is that a policyholder can add additional riders to the plan. By adding riders such as waiver of premium, critical illness, or a disability, you can increase the term insurance coverage. This is helpful in cases where a family member gets diagnosed with a critical condition. So instead of burning a hole in your savings, you can utilise the term insurance plan and pay the medical bills.
If you wish to waiver off your premium, you can get all the premiums back with a term insurance plan with a return of premium. This works in a situation where you outlive your term insurance plan.
- Covers critical illness
If you know what is health insurance and have yourself covered against medical expenses, you may wonder what is the need for a critical illness cover? However, critical illnesses can be severely damaging to your financial health. Hence, investing in a term insurance plan works well when medical issues come knocking at your door unexpectedly. To avoid the stress of paying exorbitant medical bills, you should get a term plan which includes a critical illness such as cardiovascular diseases, cancer and other severe conditions.
- Covers accidents
If you compare a life insurance plan with a term insurance plan, the benefit of term plans is enormous. In case of an unfortunate accident or accidental death of the policyholder, their family will be safe from the financial overload of the medical treatments. Adding accidental death benefit to your term plan can increase your coverage and stay prepared for an unforeseen situation.
- Includes return of premium
A term insurance plan benefits a policyholder only in the event of their demise. However, you can avail of the return of premium in a term insurance plan if you want early maturity benefits of the plan.
In this case, you will have to pay a higher premium,and when the term plan matures, you will get the lump sum amount. You will get all the amount in case you survive the policy’s tenure.
- Tax benefits
Buying a term insurance plan allows you to avail of tax benefits. This, in turn, means that you can reduce your tax liabilities by investing in a term plan. Under Section 80 C of the Income Tax Act,1961, the policyholder can reduce the term plan by Rs 1.5 lakh per annum. The payout, however, is exempt under section 10 (10D) of the tax laws.