A term insurance is one of the most sought after insurance products in the current day and age. And there are good enough reasons for the same. At its center, it is as simple as life insurance can get. A policy holder pays a premium for a certain number of years or the policy term and in return, the insurer provides life insurance cover for the individual.
In the unfortunate event that the policy holder loses his/her life, the insurer will pay the sum assured to the nominees mentioned in the policy documents. A term insurance ensures that your family does not have to worry a lot about finances in your absence. A high life cover is one of the major reasons behind the immense success of a term plan.
The high life cover ensures that your family members can not only fend off their current financial situation but also handle bigger milestones. The policy can also be used for paying children’s education or even marriage.
Why Buy Term Insurance
Apart from the most obvious reason of providing life cover, there are lot of other prominent reasons why you must consider and eventually buy one.
The premium that you pay for a term insurance is very affordable. They are affordable when you consider the amount of coverage that they offer. If you take a quick look at other life insurance products and their life cover, a term plan would seem really affordable. To bring some number to the context, a person in his/her 30s would end up paying INR 8000 or thereabouts for a coverage of INR 1 Crore. That is a handsome coverage for the kind of premium that you are paying.
A term insurance plan brings a lot of flexibility to the table which makes it even more popular among buyers. For starters, the term or duration for which you wish to buy the policy is completely your call. Some policies have a minimum term like 5 years and the maximum goes up to 35-40 years depending on your insurer. Similarly, you can select the payment frequency and riders that you want along with the policy. Essentially, you can customize the policy as per your needs.
If you feel that a term insurance plan is too vanilla for your liking, you can add riders to the same. There are a lot of valuable riders that you can opt for. For an instance, you can add critical illness cover or accidental death benefit or waiver of premium or disability rider etc. to your policy. Each one of them brings different benefits in addition to all the benefits that you already have access to.
Benefits of Buying a Term Insurance
Now that we know that a term insurance plan is affordable and packs in a lot of features and benefits for its price, it’s time to look at the benefits. Here is a list of the most important benefits of buying a term insurance policy.
- Longer Coverage
The rule of thumb says that you must have good life coverage during the most responsible years of your life. For an instance, 40s and 50s are when your responsibilities will be at their peak. You might have a home loan, children’s education loan or a car loan. A term plan lets you buy a cover for a longer period of time. This means that if you are in your 20s or early 30s, you can buy a policy for 30 years and cover the most crucial age.
- Increase Coverage
Most of the term plans will let you revise the sum assured at certain life milestones. For an instance, post your marriage, you can increase the sum assured by 50% and on the birth of a child the same can be extended by additional 25%. This way, you do not have to buy a new policy and the existing policy would hold good for a much longer duration.
- Women and Non-Smokers
There are enough statistics to prove that women outlive men by an average of 5 years. This translates into slightly lower insurance premiums for women. If you are someone who does not smoke you also stand to benefit from slightly lower premiums. However, one must be careful with the non-smoker status, as false declaration can prove to be expensive during claims.
- Tax Benefit
A term plan offers dual tax benefits under the Income Tax Act of 1961. The premium that you pay up front is deductible from your income under Section 80C. Also, any proceeds of the fund are non-taxable under Section 10D (D); ensuring that your loved ones do not have to pay any taxes on the payouts.
There are a lot of positives, features and benefits that you receive on buying a term insurance. If you wish to secure higher life cover, a term plan is a must.