Life is uncertain and you can never predict what the future holds. So, You must start investing in a term insurance plan, as early as you can, to make sure that your family is financially secure in your absence. It is the most basic, affordable, and easy-to-buy life insurance plan which protects the financial future of your family at a nominal cost. A term insurance plan is especially popular because it asks for low premiums, yet your family gets the entire amount.
A term plan does not only secure your family’s future but also provides tax exemption benefits known as term insurance tax benefits
What is Term Insurance Plan in India?
A term insurance plan is a type of life insurance plan that covers the policyholder for a certain period in return for a specific amount of premium. It guarantees payment of the death benefit to the nominee if the policyholder passes away during the term period specified in the policy.
The main purpose of a term plan is to take care of your family in your absence. The lump sum pay-out is offered to the family of the policyholder, which can be used to fulfill their financial needs. It can also be used to meet their regular expenses and long-term goals in case of unforeseen circumstances.
Key Features of a Term Insurance Plan
There are many benefits of investing in a term plan, here’re the most important ones.
- A term insurance plan is the simplest and the best way to create a corpus to protect your dependents in case of your unfortunate demise.
- You can choose the coverage of a term plan by comparing the various term insurance plans online.
- Along with the death benefit, you can also get additional benefits at an economical term plan premium rate.
- The information related to a term insurance plan can be easily accessed online. There is a wide range of insurance companies with affordable plans. You can compare and select any as per your requirement and suitability.
- You can also buy rider benefits by paying an extra premium along with the basic pay of the plan. Some of the riders offered by term plans are an accidental death benefit, partial or permanent disability, and waiver of premium.
5 Reasons Why You Need to Buy a Term Insurance Plan
The main objective of investing in a term insurance plan is that it should be able to provide your family with adequate income in case of you suffer a mishap.
Here are the 5 reasons you need to invest in a term insurance plan.
Affordable Premiums
Premiums for all term insurance plans are much lower than other insurance plans. The policyholder may have to pay only about one percent of their annual income to get a life cover. The main reason for the lower premium rate is that there is no investment element in the insured amount.
Tax Benefits
You can avail a deduction of up to INR 150,000 per annum, with respect to the premiums paid. The tax benefits in a term plan are provided under Section 80C of the Income Tax Act, 1961. Also, the death benefit paid to the nominee is tax exempted under Section 10(10D) of the Income Tax Act 1961.
Easy to Purchase
Compare all the various plans and premium rates online and choose the best suitable plan for you. Browse through websites of insurance providers and you can buy the right insurance in just a few clicks. You should note that term plans bought online are cheaper than regular term plans which are bought from a company office or through agents.
Flexibility
A term insurance plan is highly flexible. You can select any online or offline term plans for which health plans are not mandatory. You are also allowed to change the plan and customize it when required.
Riders Benefits
Riders are the additional benefits that come with term insurance plans to suit the requirement of the policyholder. You should buy riders only in case of genuine need and carefully go through the offer documents to read all exclusions before buying the plan. Some riders you can choose along with term plans are critical illness, accidental death benefits, partial or permanent disability etc.
A term insurance plan offers various benefits. It takes care of medical expenses, education and other expenses of the family. It also helps to pays off loans or debts that might have been taken during the lifetime of an individual. It is an important decision to take especially when life is so very uncertain.
