Benefits of Term Life Insurance Plans

Term insurance protects your family financially if you cannot provide for them. Term insurance plans are often regarded as one of the most effective life insurance policies available today.

Term insurance not only protects your family financially in the worst-case scenario and gives tax advantages. Not only that, but term plans provide a variety of additional benefits. Consider the following term insurance advantages.

What are the Benefits of Term Insurance? 

The following are some of the advantages that term insurance plans may provide:

1. High Sum Assured at Affordable Premium

A term insurance policy is an essential kind of life insurance. One of the critical advantages of term insurance is its low cost. Compared to other life insurance plans, a term insurance policy has a lower premium. Another significant advantage of term insurance is that the rate is reduced the sooner you get it.

Furthermore, getting term insurance online may result in a cheaper premium than obtaining it offline. In other words, the cost savings realised by the insurer are passed on to you as one of the advantages of term insurance plans. You may easily simply verify the term insurance advantages online.

2. Easy to Understand

You may find it challenging to grasp the insurance-specific terminology of numerous life insurance plans while purchasing a life cover. One of the most appealing aspects of term insurance plans is their simplicity.

A term insurance plan, being a pure life insurance policy, does not include an investing component. To provide term insurance benefits, you pay premiums, and the insurer insures your life for a certain period of time.

3. Multiple Death Benefit Payout Options

You might be paying the EMIs on your new house, vehicle, or a personal loan. Your financial obligations may fall on your family members in your absence. It is here that the numerous payout choices of a term insurance policy come into play.

In the event of your untimely death, your dependents may receive a lump sum payment to assist them in managing the aforementioned financial commitments.

Some term insurance plans also allow you to receive a monthly income in addition to the lump sum amount as the death benefit. Your family may find it simpler to handle routine costs with this monthly income.

4. Additional Riders to Strengthen the Policy

Term insurance plans have riders that may be added to the standard term insurance coverage. You may add these riders to your term insurance policy for a little extra fee.

5. Income Tax Benefits

Term insurance plans also provide tax advantages. While the premium you pay for a term insurance plan is tax-deductible, the payments are tax-free under current tax legislation.

Term Insurance Benefits under Section 80C

The premium you pay to obtain a term insurance plan is tax-free under Section 80C of the Income Tax Act of 1961, up to a maximum of Rs.1.5 lakh per year. You may maximise your term insurance tax advantages under this section by choosing the plan with the highest available coverage for your age and health.

Term Insurance Benefits Under Section 10(10D)

According to Section 10(10D) of the Income Tax Act of 1961, the death benefit of term insurance policies is totally exempt.

6. Critical Illness Coverage

You may have catastrophic diseases at any age, and acquiring the required care might deplete all of your funds. Although the core advantages of term insurance policies are solely life insurance, you may add critical illness coverage by purchasing add-ons/riders.

If you are diagnosed with one of the catastrophic diseases covered by the insurance, you will get a lump sum payment. You may use this coverage to pay for required care without depleting your funds.

7. Accidental Death Benefit Coverage

Accidents may occur at any moment and can result in death or dismemberment. To reap the advantages of a term insurance policy with an accidental death rider, you may add it at purchase or afterwards. You should also grasp the coverage advantages of different riders before including them in a term insurance plan.

8. Return of Premium Option

A pure term insurance policy solely offers life insurance to the beneficiary if the life insured dies unexpectedly. It offers no advantages to maturity. However, if you choose the return of premium option, you may get maturity benefits under a term insurance policy.

This choice will require you to pay greater premiums, but if you survive the policy term, you will get a refund of the whole premiums paid. However, the total premium amount that will be reimbursed does not include any taxes, levies, rider premium, or the modal amount paid on the premium.

Nowadays, you may simply estimate the premium of a term insurance plan with or without maturity benefits using an online term life insurance calculator. It will assist you in making a sensible selection based on your financial requirements.

Choosing Right Term Insurance Plan is Crucial

There are many different types of term insurance policies available on the market, each with its advantages. However, when contemplating term insurance benefits, it is best not to take a one-size-fits-all approach.

You should get enough life insurance coverage depending on your financial responsibilities and pick suitable add-ons based on the kind of coverage you need. Before purchasing a term insurance policy, ensure that you know and comprehend the many aspects of obtaining term insurance plans online or offline.

As a general guideline, get a term insurance policy with a coverage of at least eight to ten times your yearly salary. For example, if you now earn Rs. 5 lakh per year, you should choose a life cover of Rs 40 - 50 lakh or more to get the most advantages from a term insurance policy.

Use our online term life insurance calculator to calculate your term insurance rates.

Wrapping It Up

Saving money is an essential component of life for everyone. Every person seeks strategies to lower tax responsibility, especially when saving taxes. You may also get tax savings by purchasing term insurance.

Along with life insurance, you may profit from term insurance tax breaks. However, you should know a few things about term insurance advantages in income tax. Leverage the powers of the term life insurance calculator!