A term insurance plan is a life insurance product that provides financial coverage to the policyholder for a specified period of time. In the event of the sudden death of the policy holder, the entire amount is paid to his family members. The Term Insurance Plan provides stable financial coverage for your loved ones in the event of any unfortunate accident.
Advantages of buying a term insurance plan
Before embarking on purchasing a term life insurance plan, you should know the advantages of investing in a term insurance plan.
We have curated a detailed list of features. Read together to find out how you can better plan for your family’s financial future.
- Greater life coverage
A life insurance plan provides you with more life coverage at a higher premium. This is better than the endowment plan. For example, a 30-year-old can get a term plan of Rs 1 crore by paying a 30-year premium. In the case of an endowment plan it would not be suitable for a 30-year-old.
- Guaranteed high amount at reasonable price
The main advantage of purchasing a term insurance plan is that it is affordable. Compared 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, the less you will pay a premium.
Buying a term insurance plan online is better than buying offline as it helps you save on the cost of premiums.
- Increase life cover
There are stages in an individual’s life when they need money for their children’s education or their marriage. The best thing about a term insurance plan is that it allows you the flexibility to increase life coverage at crucial stages in a policyholder’s life, such as when they marry or when they become a parent.
- easier to understand
The second advantage of buying a term insurance plan is that it is easy to understand. The term insurance plan does not have an investment component, and there are no difficult terms related to the term plan.
- Many death payout options
If you’re bombarded with monthly payments (EMIs) for your new home or car and are finding it difficult to manage new policies, choosing a lifetime insurance plan is a great option. In the event of the sudden death of the policy holder, family members tend to bear the financial burden. To avoid such a difficult situation, you can take advantage of the term insurance plan as it allows you to get a lump sum or monthly/quarterly/annual payments. This, in turn, can help your family support themselves in a much better way.
- Additional riders
The best thing about a term insurance plan is that the policyholder can add additional passengers to the plan. By adding passengers such as a premium waiver, critical illness or disability, you can increase your insurance coverage. This is useful in cases where a family member has been diagnosed with a critical condition. So instead of making a hole in your savings, you can take advantage of a term insurance plan and pay your medical bills.
If you want to waive your premium, you can get all premiums back through a term insurance plan with premium return. This works in a situation where you have overstayed your fixed term insurance plan.
- Covers serious illness
If you know what health insurance is and cover medical expenses, you may be wondering what is the need for critical illness coverage? However, serious illnesses can seriously damage your financial health. Hence, investing in a term insurance plan works well when medical problems knock on your door unexpectedly. To avoid the stress of paying exorbitant medical bills, you should get a term plan that includes a critical illness like cardiovascular disease, cancer, and other severe conditions.
- Accident covers
If you compare a life insurance plan to a term insurance plan, the benefit of long-term plans is enormous. In the event of an unfortunate accident or accidental death of the policy holder, their family will be safe from the excessive financial burden of medical treatment. Adding an accidental death benefit to your term plan can increase your coverage and prepare for an unexpected situation.
- Includes premium return
The insurance plan benefits the policy holder only in the event of his death. However, you can take advantage of a premium return in a term insurance plan if you want the benefits of early maturity for the plan.
In this case, you will have to pay a higher premium, and when the term of the plan expires, you will get a lump sum. You will get the full amount if the policy term is still in effect.
- tax advantages
Purchasing a term insurance plan allows you to take advantage of the tax benefits. This, in turn, means that you can reduce your tax liability by investing in a fixed-term plan. Under Section 80c of Income Tax Act 1961, the policyholder can reduce the term of the plan by Rs 1.5 lakh annually. However, the payments are exempt under Section 10 (10d) of the tax laws.
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