You should remember that life itself is flighty. You may weave numerous plans and financial objectives in the course of your life, and at that point, work out the math to assemble funds to achieve them. But an untimely demise can imperil these objectives while leaving your family stranded. In such troublesome occasions, no measure of cash can replace the loss of a dear one; however, term insurance benefits can financially secure your family in your absence.
In this blog, we will clarify what term life insurance is and enlighten you regarding a few critical term insurance benefits.
Term life insurance is a form of life insurance that provides financial security or death benefit to the policy nominee in case of the untimely demise of the policyholder. The insured person pays a specific premium towards the insurance coverage for a particular time limit. A term protection plan doesn’t offer any maturity benefits like conventional, money-back or market-linked life insurance policies. Yet, it gives a lot higher inclusion for a less amount of premium.
Important term insurance benefits
Term Insurance Policies are very easy to comprehend: Simplicity is one reason for the growing popularity of term life insurance. Term life coverage is a pure protection plan that centers around offering your loved one’s financial security in the form of sum assured in case of your absence. One thing that you need to ensure is paying the premiums on time.
Term protection plans are remarkably affordable: Term policy premiums are as low as 0.1 percent of the total coverage amount. This implies that in the term insurance policy, you get a higher death benefit amount against a considerably a low premium amount which is not offered in any other life insurance policies.
Term Plans offer a lot higher insurance coverage amount in contrast with conventional plans: The total sum assured amount for traditional endowment policies, or ULIPs are around 7 to 10 percent of the annual premium. So, in the case above plans, if you pay a yearly premium of Rs 30,000, you get insurance coverage of Rs 3 lakh that is probably not enough to cover your family’s expense for a long time.
Whereas a term plan offers a lot higher sum assured amount so you can leave your family and wards enough funds that they don’t experience financial difficulty in your absence. The average coverage amount in case of term insurance is Rs 1 crore for which the premiums will be in the range of Rs 10000 to Rs 17000. This means the insurance coverage amount offered by term insurance is about 60 times higher as compared to other forms of life insurance policies.
Term plans offer tax benefits: While the essential purpose behind purchasing a term life insurance is making sure about your family’s future, but you also get the opportunity to save taxes. So, let’s take a look at its three tax benefits.
Section 80C: Under this segment, you can avail tax deduction up to Rs 1.5 for the premiums paid for the term life insurance policies.
Section 80D: This exclusion is permitted for the premiums paid towards health-related insurance coverage such as critical illness riders. You can claim the tax deductions up to Rs 25,000 for the premiums paid towards it.
Section 10 (10D): This benefit can be availed while claiming the payout of the term insurance. The entire insurance coverage amount is wholly exempted from taxes.
Premiums are fixed for the entire tenure of the policy: When you buy a term insurance plan, you set the premium amount for the whole policy term. And this is the reason why you should start your term policy as early as possible to enjoy premiums at lower rates throughout the tenure of the policy. Let’s understand with an example – if you buy a Rs 1 crore term insurance plan at the age of 30, your premium amount will be around Rs 10,000 per year. Whereas, if you buy the same policy at the age of 45, then probably you will have to shell out about Rs 30000 towards paying your premium.
The bottom line is as examined in the article; there are several term insurance benefits. It gives higher insurance coverage against a lower premium, it’s easy to comprehend and accompanies tax benefits. Yet, before figuring in all the advantages, you ought to recall the main objective of purchasing the term plan is financially securing your loved ones during uncertainty and not for saving funds. Therefore, you must understand all aspects of term life insurance properly starting from its features, advantages, and disadvantages before you decide to buy one. You can visit BimaKaro.in for all your insurance queries or even speak to their insurance advisors by requesting a call back.
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