With term insurance plans in India, you can protect your family’s finances in case of any unfortunate casualties. One of the most significant categories of life insurance that a person should purchase nowadays is term insurance.
Term insurance offers tax advantages and gives your family financial security in the worst-case scenarios. In addition to this, term plans offer several other advantages. Check out the benefits of term insurance below.
What advantages does term insurance offer?
The advantages of having term insurance coverage are as follows:
- Affordable premium with high sum assured
- Simple to comprehend
- Various options for death benefit payment
- Further riders
- Income tax advantages
- Coverage for critical illnesses
- Coverage for accidental death benefits
- Premium refund option
Let’s go over the advantages of term insurance in more depth:
- Large amount assured at low premium:
A straightforward type of life insurance is a term insurance policy. The low price of term insurance is one of its main advantages. A term insurance plan is offered at a more affordable rate than other types of life insurance. The fact that the rate for term insurance can be lower the earlier you purchase it is another significant term insurance benefit.
- Simple to comprehend:
While purchasing a life cover, you can find it challenging to comprehend the insurance-specific words pertaining to numerous life insurance policies. Term insurance plans’ ease of understanding is one of their key advantages. A term insurance plan does not include an investing component because it is a pure life insurance policy.
- Various options for death benefit payout:
Your family members can repay the EMIs on a personal loan you may have taken out when you are no longer around with the help of the death benefit payout. Your family members can handle your financial obligations with better financial dignity.
- Additions to the policy’s riders to strengthen it:
There are riders available for term insurance plans, which you can select to increase the term insurance tax benefits of the standard coverage. By adding these riders, you can expand your term insurance policy for a small additional fee. By adding a critical illness rider, for instance, you can get more tax benefits.
- Benefits from income tax:
Plans for term insurance also offer tax advantages. While the cost of a term insurance policy is tax deductible, the payouts are likewise exempt from taxes under the current tax code.
- Benefits from term insurance under section 80C:
The premium you pay to purchase a term insurance plan is exempt from tax under Section 80C of the Income Tax Act of 1961 up to a maximum of Rs. 1.5 lakh per year. By purchasing the plan with the maximum coverage available to you based on your age and health, you can fully take advantage of the section’s term insurance benefits possible.
- Benefits based on section 10 (10D):
According to the guidelines of Section 10(10D) of the Income Tax Act of 1961, the death benefit of term insurance plans is tax-exempt.
However, note that some of these term insurance tax benefits may be applicable only for those who are old regime taxpayers. These benefits are also subject to terms and conditions.
- Coverage for critical illness:
Critical illnesses can strike at any stage of life, and the cost of the necessary care may wipe out all your money. Although the core advantages of term insurance only cover life, you can add add-ons or riders to your policy to cover critical illness.
- Coverage for accidental death benefits:
Accidents can occur at any time and can result in decapitation or passing away. Therefore, you can utilize this cover to provide for yourself and your loved ones in such situations as well.
- Premium option return:
If the life insured passes away suddenly, a pure term insurance plan solely offers life coverage to the beneficiary. It offers no advantages in terms of maturity. However, if you choose the return of premium option in your term insurance plan, you can receive a maturity amount when the policy matures and your outlive it.
If you choose this option, you may have to pay higher premiums, but if you live through the policy’s term, you can receive a refund of your total premium payment.
Purchasing a term insurance plan in India is crucial because it helps your family reduce any financial hardship they may experience if you are no longer present.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.