One always hopes that their family should be financially capable of handling the burden of expenses in case of an untoward situation. Through a term life insurance policy, financial security for your family, for the time you’re not around anymore, becomes a conveniently achievable goal.
In today’s time, when life has become uncertain in the presence of incurable diseases, buying term insurance is of utmost importance among all the different types of life insurance. Term insurance offers you coverage in the form of the death benefit to the nominee who will take your place in your absence. Apart from that, there are other benefits of term insurance, which can be understood briefly below:
Benefits of Term Life Insurance Plans
Whole Life Cover
Term insurance offers whole life cover. A majority of term insurance plans provide coverage up to 60 years of age. However, there are some term life insurance plans which offer you cover up to 85 years of age which can be further extended to 100 years of age.
This helps you to reduce the financial burden on your loved ones in case you are the sole breadwinner in the family.
High Sum Assured with Affordable Premium
The cost of a premium for term plans is much lower as compared to any other type of life insurance policy. As per the golden rule, it is advisable to buy a term insurance plan as early as possible as the premium you pay when you are young is much lower as compared to later years.
It is also advisable to buy your term insurance plan online to avail further benefits and discounts on the premium of your policy.
Income Tax Benefits
The premium which you pay on your term insurance plan is eligible for tax exemption. The highest limit of tax benefits one can avail on the premium is ₹ 1.5 lakhs. Moreover, some term insurance plans also offer a return of premium, which provides further tax benefits.
As per Section 80C of the Income Tax Act, the term insurance premium paid for your children and spouse are also eligible for tax exemptions. If a person is suffering from a disability or illness listed under Section 80U, the tax benefit limit is raised to 15% of the total sum assured.
As a result, by purchasing a simple term insurance plan, you can safeguard the lives of your family members and save taxes on your hard-earned income at the same time.
Some term insurance plans have the features of whole life insurance policies when it comes to returns on investments. Such term plans offer a return of premium if the policyholder survives the entire tenure of the policy. These are known as maturity benefits of the term plan.
Or, you could also opt for a term plan that offers to cover life and also provides maturity benefits to the policyholder, instead of a term whole life insurance.
Additional Rider Benefits
You can strengthen your current term insurance plan by opting for various rider benefits.
For example, one can opt for the accidental death rider benefit using which if the insured passes away due to an accident, the accidental death rider benefit will pay an additional sum assured. Or you could choose the critical illness benefit rider wherein the policyholder will receive a lump sum amount on diagnosis of critical illness pre-specified in the policy.
When you opt for a rider, you need to pay an additional nominal premium amount which would help you to enhance your policy coverage.
When you buy term insurance, you must be well-informed about its technicalities before making any purchase. As a thumb rule, remember that the coverage you choose must be 8-10 times the amount of your annual income. For the ease of calculation of premium, you can also make use of a term insurance calculator so that you select an insurance plan that best suits your financial needs.