Term Insurance Benefits You Should Know About

Life Insurance acts as a safeguard against any financial loss that might result from the ‘premature’ death of a person. When an insured person passes away, their family (nominees) receive a lumpsum amount known as the sum assured. This lumpsum amount helps the family avoid any financial hardship that they might have faced otherwise. Life insurance is an indispensable asset for any person with dependents. If you are the breadwinner of your family, then getting a good life insurance policy should be one of your top priorities.

Nowadays, there are multiple types of life insurance policies that you can choose from. The simplest form of life insurance is a term plan, where the priority is to just get a high sum assured for an affordable premium.

A Simple Definition for Term Life Policy

A term insurance plan is a life insurance plan which promises to pay a ‘sum assured’ if a person passes away during the tenure of the plan. Since the plan covers only death risk, the premiums for this policy are lower than other types of life insurance policies. A term plan’s primarily function is to secure your familys needs in case of your untimely demise, or in case you can no longer provide for your loved ones due to an accident or illness.

Term plans do not have any savings or investment elements to them. The transaction is completely straightforward, you pay premiums to the insurer, and they ensure that your family is taken care of in your absence.

Key Features of a Term Insurance Plan

Eligibility Criteria: To buy a term insurance plan, the proposer must have completed 18 years of age, and the age should not exceed 65 years.

Premium: The premium for term plans is the lowest among all types of life insurance policies. The premiums are low because there is no investment component involved, and the entire premium goes only in covering the risk (of your death). There is no survival benefit or maturity benefit after the policy term is over. However, there are some term plans that come with return of premium benefit. Return of premium benefit only gives you back your total premium amount at the end of the term without any growth or bonuses.

Surrendering of the Policy: You can exit from an insurance plan before maturity. This is called surrendering the policy. Some surrender charges may be deducted, which vary depending on the policy terms & conditions. No charges will be levied if you surrender your policy after five years.

Insurance Riders: Insurance riders are benefits that you can add to your policy for extra charges. Riders can prove extremely useful if the events they cover come to pass. Even if a rider is triggered, the life insurance cover remains intact. Following are some insurance riders provided by us:

• Critical Illness Rider ensures that you receive financial support on being diagnosed with critical illnesses, such as cancer. This rider can help you pay for the medical treatment as well as pay for your family’s daily needs.
• Accidental Total and Permanent Disability Rider ensures entitled to receive benefits on attaining disability due to some accident or such other event.
• Accidental Death Benefit Rider provides additional financial support to the policyholder’s family if they pass away in an accident.
• Waiver of Premium Rider is active only if any of the other riders are triggered. With this rider, the policyholder or their family is not required to pay any more premiums on the policy. Even though they no longer pay premiums, the policy still remains active, and they continue receive the appropriate benefits.

Benefits of Having a Term Insurance Plan

Simplicity: Term insurance plans are easy to comprehend as compared to savings plans or ULIPs which provide risk cover as well as maturity returns. Term life plans are straightforward; you pay the premium and get covered for the term chosen.

Reasonable Pricing : Different term life plans can be easily compared to each other on the basis of cost as they are structurally similar and are simple to comprehend. Generally, term plans are significantly more affordable than other types of life insurance policies.

Tax Benefits : All life insurance plans are subject to various tax benefits under u/s 80C and 10(10D) of the Income Tax Act. However, according to Section 80C, you can only claim Rs. 1.5 Lakhs in deductions on life insurance premiums. Keeping these factors in mind, you can buy an affordable term plan that is completely tax deductible, while still getting the life cover you need to secure your family.

Higher Sum Assured Rates : Terms plans tend to have affordable premium rates for a high sum assured. For example, Edelweiss Tokio Life- Zindagi Protect provides a minimum sum assured of Rs. 50 lakhs for a minimum monthly premium rate of just Rs. 300. T&C Apply.

How to Choose an Insurance Plan That is Best for You

• Check the credentials of the insurance company.
• Calculate and decide how much life cover you require.
• Check the claim settlement ratio of the insurance company.
• Factor in inflation and your liabilities while finalising the premium rate and sum assured.
• Check the terms & conditions of various insurance plans thoroughly to find a policy that best suits your needs.

To make your financial planning foolproof, you may take two-term insurance plans with different tenures and riders.

Conclusion

Buying a term plan is easier now than ever before. All you need is your identity proof, like passport, PAN Card, Driving license etc, and proof of your income via bank statements. You may also have to undergo a medical check as part of the onboarding process. Once you clear the medical check-up, you will be provided with the policy document. Nowadays, you can also complete your insurance purchase online through your computer, or even from your smartphone! Go to our term insurance buying journey to secure your future today.

 

Neha Panchal - Financial Content Writer

Neha used to be an Engineer by Profession and Writer by passion, which is until she started pursuing full-time writing. She's presently working as a Financial Content Writer, with a keen interest in all things related to the Insurance Sector.