1. What is Term Insurance?
Term Insurance is the basic or pure life insurance cover wherein the family will get the sum assured in the event of an unexpected death of the insured person. It is one of the most affordable form of life insurance. With a term plan, you can provide financial security to your loved ones/nominee(s) by ensuring a death benefit payout in case of your unfortunate death. However, in exchange for this life cover, you must pay premiums to the life insurance provider.
A term plan's life insurance coverage is active for a set period, that is determined at the time of purchasing the plan. This is known as the Policy Term. For example, it can be 10, 20, or 30 years. Furthermore, some term insurance plans may even provide life insurance coverage up to 100 years of age. A term policy is also called a pure life insurance policy, meaning, it does not include any investment/savings component.To learn more about Term Insurance, click here.
2. How is Term Insurance different from Life Insurance?
Life Insurance is a contract wherein the Insurance Company will pay a lump sum amount if the insured meets with an unexpected death or if the policy matures.Alternatively, a term insurance policy is a type of life cover where there is only a life cover benefit is paid to the nominee in case of the insured’s death, and no maturity benefits are payable. Read more here: Term VS Life Insurance – Which one is better?
3. Why is Term Insurance necessary?
Term Insurance is necessary to secure your family financial future in case of any unexpected eventuality. The term insurance payout allows your family to continue their lives with dignity and financial security. Read more about, Term Insurance Benefits here.
4. Is there a maturity benefit in Term Insurance?
No, there is no maturity benefit in a term plan.
To understand this in detail, let’s first understand what maturity benefits in life insurance are. Maturity benefits refer to the sum assured and bonuses that an insurance provider pays out to the policyholder upon completion of the policy tenure. This feature turns traditional life insurance policies into saving instruments. However, term insurance plans do not offer any maturity benefits and solely provide protection. As a policyholder must pay a predetermined premium amount for a fixed period of time. In the event of an unfortunate incident occurring within the policy term, the nominee will receive a set amount according to the plan's terms and conditions.
5. Who should buy Term Insurance Plan/Policy?
A term insurance policy is necessary for a person who is the only earning member in the family, has many financial commitments and/or has taken multiple loans/advances that are pending repayment. To learn why a term insurance plan in 2023, read more here.
6. What is covered in Term Insurance Plan?
A Life Insurance Term Plan will provide a life cover that provides claim settlement in case of any natural or any health-linked death. It can be due to an accident or a serious medical condition that ultimately results in a death.
7. Is there a Tax Benefit for Term Insurance Plan?
You can buy a term plan to get tax benefits under Section 80C of the Income Tax Act, 1961. Additionally, the term plan payout is tax-free under Section 10 (10D) of the Act. Read here if you are considering purchasing a Term Insurance plan for tax planning.
8. What is the Better Half Benefit in the Edelweiss Tokio term plan?
You can give your partner an additional life cover up to 50% of your term plan cover in your absence with this benefit.
9. When should you take Term Insurance and Why?
Term life insurance coverage should be purchased at a younger age as the premiums will be available at a lower rate. However, you can buy a term plan at any stage of life to ensure optimum protection for your family.
10. Why You Should Consider Buying a Term Insurance Plan?
- Affordability: Term life insurance is typically much cheaper than permanent life insurance, such as whole life or universal life. This is because term life insurance only covers you for a specific period of time, whereas permanent life insurance covers you for your entire life. This means that term life insurance premiums are generally much lower than those of permanent life insurance.
- Coverage for specific needs: Term life insurance is ideal for those who only need coverage for a specific period of time, such as the years when their children are dependent on them financially or when they have a mortgage to pay off. This type of insurance is also a good option for those who are concerned about their beneficiaries' financial future, in case of unexpected death.
- Flexibility: Term life insurance policies often come with the option to convert to a permanent life insurance policy, which gives you the flexibility to choose the coverage that best fits your changing needs. Additionally, many term life insurance policies come with a return of premium option, which allows you to get your premiums back if you outlive the term of your policy.
- Tax benefits: Premiums paid for a term life insurance policy are tax-deductible, which can help to lower your overall tax bill. Additionally, the death benefit paid out to your beneficiaries is typically tax-free, which can help to provide financial security for your loved ones in the event of your death.
- Peace of mind: Having a term life insurance policy in place can provide peace of mind for you and your loved ones. Knowing that your loved ones will be financially secure in the event of your death can bring a sense of security and comfort to everyone involved.
Siddhant Dubey - Writer & Photographer
Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.
