Term insurance has become a prevalent form of life insurance in recent years. It offers comprehensive financial protection to your family at a very affordable price.
If you are considering whether to purchase a term plan, this blog will highlight the top 5 benefits of term insurance to help you make an informed decision.
1. Low-Cost Insurance Cover
The most significant advantage of term life insurance is that it is highly economical compared to other types of life insurance. The premium of term insurance can be significantly lower than that of traditional insurance policies.
This can allow you to purchase a policy offering a large coverage amount at a relatively low price. For instance, a Rs 1 crore cover can be availed for as low as Rs 10,000-15,000 annually if you are under 30. This makes term plans highly affordable to most people.
2. Customisable Coverage
Term plans are highly flexible. You can customise them as per your specific protection needs. For example, if you want coverage for the next 15-20 years when your financial liabilities are high, a term insurance plan can allow you to do so.
If you die untimely during this period, your financial dependents will be taken care of. You can also extend a policy or enhance coverage when major life events occur.
3. Comprehensive Financial Security
The death benefit in term insurance aims to replace your family members’ income loss. This can ensure that your financial dependents can maintain the same standard of living even in your absence.
Your family will be saved from liquidating assets or taking loans to cover expenses under challenging times. Hence, a term insurance policy can give you complete peace of mind that your financial responsibilities will be fulfilled even when you are not around.
4. Tax Benefits
Term life insurance policies qualify you for tax deductions under Section 80C and Section 10(10D) of the Income Tax Act. The premium you pay yearly up to Rs 1.5 lakhs allows you to avail of tax savings under Section 80C. If your dependents receive a claim payout in case of your death during the policy term, this amount is also tax-free under Section 10 (10D).
5. Long Term Savings
Some insurance companies also offer term riders that allow you to accumulate savings for the long run. Riders like critical illness riders or permanent disability riders pay out the sum assured in case the policyholder is diagnosed with a listed illness or suffers permanent disability.
You can also opt for life insurance riders that offer guaranteed additions to enhance your coverage over time. These riders can help you accumulate funds for retirement or future goals while enjoying insurance protection.
Essential Factors You Should Consider
While buying term insurance, partner with a reliable insurer with a claim settlement record of over 95%. This is an indicator of strong financial stability. Importantly, consider opting for adequate coverage of at least 10-15 times your annual income to provide a robust safety net for your dependents. Try including optional riders for enhanced protection and guaranteed savings. Riders allow you to customise your plan according to your current and future financial needs.
Final Glimpse
Term insurance benefits anyone with financial dependents or liabilities, such as home or car loans. It ensures your family can maintain their quality of life and meet financial goals in your absence. Consider buying an appropriate term insurance policy to secure the future of your dependents.
