Keeping you and your family financially secure is one of the primary toles of insurance.
However, traditional life insurance requires large premium payments because of its long tenure, making it a huge commitment.
This is not so with term insurance, which comes at lower premiums while offering coverage flexibility in comparison to traditional life insurance. It is thus no wonder that term insurance has become popular in recent years.
Read on to learn more about term insurance and how its benefits help secure your family’s future.
What is Term Insurance?
Term insurance is actually a type of life insurance. The difference is that it safeguards the policyholder and her or her family for a specific period of time. The chief draw of term insurance is that you can get a higher life cover at lower premiums.
In case of the policyholder’s death, it provides their family with a death benefit. The nominee receives this benefit in such a case. As such, this insurance policy can be suitable for long-term financial planning.
Advantages of Term Insurance
By opting for a term insurance plan, you can enjoy several benefits, which include the following:
Cost-Effective Premiums
One striking benefit of term insurance is that it is light on your pocket. The affordable premiums make it much more accessible and they are complemented by a higher life cover.
When you take a term plan at the beginning of your professional journey and without unhealthy habits, you can benefit from cost-effective premiums. For instance, for just ₹1,000 per month , you can get a term life plan of ₹2 Crores .
Different Death Benefit Payout Options
If the policyholder does not survive the insurance term, the company provides death benefits to the nominee from the family. For convenience, insurers allow family members to choose from different payout options.
For instance, the dependents of the policyholders can opt for lump-sum amounts, or choose to get it as a fixed monthly income.
Higher Coverage
Most term insurance plans offer coverage for the entire life, extending up to 99 years. They also provide a higher insured sum going up to ₹1 Crore, ₹2 Crores, even ₹3.5 Crores.
If the policyholder is no more, the insurance amount can help family members fulfil financial obligations, like paying loan EMIs.
Return of Premium Option
Term insurance plans also come with an attractive feature known as the Return of Payment. These policies are popularly called TROP and differ from standard term insurance policies. Regular plans offer life coverage to the nominee only in case of the policyholder’s demise before maturity.
On the other hand, policies with the TROP feature refund all the premiums paid as survival benefit. Some plans with the TROP facility offer 105%[EW3] of the premium amount at the end of its maturity period.
Allows Protection Enhancement
Terms insurance also allows for customisation of your coverage by giving you the option to get additional riders. Adding riders like accidental death benefits or critical illness coverage enhances the protection provided under the plan.
In addition, some term insurance riders also provide guaranteed protection in case of a listed terminal disease, such as cardiovascular disease or cancer.
Tax Benefits
The premiums you pay for term insurance can also offer tax benefits as per the provisions in the Income Tax Act of 1961. For instance, you can claim tax deductions of up to ₹1.5 Lakhs annually on the premiums paid under Section 80C.
You can also claim tax benefits on payment of premiums under Section 80D if you opt for critical illness riders on your term insurance. In addition, the death benefit provided on the policyholder’s demised is fully exempt under Section 10 (10D).
Term insurance is a simple financial tool that greatly helps you ensure financial protection for your family in unfortunate situations. If you buy this insurance policy early in your life or when you start earning, you can enjoy high coverage at very low premiums. Don’t forget to compare plans and be honest about your medical history to enjoy coverage without any hiccups.
To browse through different life insurance plans, compare, and sign up easily online, download the Bajaj Markets application from the App Store or Play Store. With a simple online process, you can secure your and your family’s financial future in just a few clicks!
