For most people, our family is the first priority in life and we do everything we can to protect them. But when it comes to financial security, why is it you opt for saving up instead of safeguarding them completely? Yes, a term insurance policy gives you family extensive coverage from any mishaps that may occur in the future. Before you think otherwise, let’s understand what term plan is and the benefits it provides.
What Is Term Insurance Policy?
A term insurance policy is a plan that gives you a life cover in return for paying fixed premiums. In case something were to happen to you, a lump sum payout would be given to your beneficiary as a financial backup. You can decide this corpus while purchasing the policy by considering your family’s monthly expenses and EMIs of any debts. The advantage of term policy over other life insurance plans is the affordable premium price. You could have a sum assured of INR 1 crore along with add-on features and still be able to fit it in your budget. Here are some term insurance benefits that you should know about before getting a policy:
Benefits of Term Plans
1. Death Benefit
A term policy provides you with a life cover that protects your family in case something unfortunate happened to you. The death benefit or sum assured is paid out to your beneficiary so that they can be financially independent. This sum assured can be taken as a lump sum payout or as a regular payout depending on the requirement.
2. Premium Benefits
You can get an affordable premium rate when compared to other insurance plans. This is due to two reasons, there is no agent involved in the buying process in case of online term plan and as policies do not have a cash value, the premium price is lower than others. Another perk you can enjoy is that you have the choice to opt for different premium payment frequency according to your convenience. The frequencies are monthly, half-yearly or yearly premium payment.
3. High Sum Assured
If you compared the sum assured available for a term plan and any other insurance policy, you would find the premium quote to be higher for the latter one. Term policies enable you to get high coverage at budget-friendly rates. The corpus is great enough to sustain your family without any financial setbacks.
4. Survival Payout
Term plans do not provide with any maturity benefit as it a pure life cover policy. However, by choosing a Return of Premium Plan (TROP) you can also enjoy maturity benefit by getting your premiums back on surviving the policy term. This is termed as a survival benefit available only with term insurance.
5. Tax Perks
With insurance plans, you can avail tax benefits on the premiums paid towards the policy under Section 80C of the Income Tax Act, 1961. Also, the death benefit can be claimed for tax deductions under Section 10(10D). With the help of such tax benefits, you can decrease your taxable income, making this a lucrative option.
6. Insurance Riders
Riders are additional elements that you can add to your term policy to increase the coverage. These insurance riders cover you from unforeseen conditions like getting diagnosed with a critical illness or sustaining permanent disability by providing with a lump sum or regular payout. The coverage and benefit provided by the rider go beyond the term insurance. There are add-ons such as a permanent disability rider, critical illness rider, accidental death rider, and waiver of income rider amongst others.
With a term insurance policy, you can easily enjoy all the six benefits mentioned above and safeguard your family.