With an affordable and flexible life insurance term plan, you can ensure your family is financially secured at different stages of life. It is a financial safety net for your loved ones in your absence. If you are the person insured, you have to pay a specific premium amount at fixed intervals for a policy term of your choice. In case of your unfortunate demise during the policy term, your cover amount is paid to your selected beneficiary.
Considering the evolving lifestyle, ever-rising inflation and increasing cases of critical illness, it is crucial to understand everything about life insurance term plan and the best term plan available in market.
What is a Life Insurance Term Plan?
A life insurance term plan is a type of life insurance policy that offers compensation to the nominee
on the condition that an unfortunate death of the life assured, during the tenure of the policy. In such cases of unforeseen death of the life assured, a sum is assured to the beneficiary; this sum is called the death benefit. A term life insurance plan, also known as pure protection plan, is a budget-friendly plan that provides greater coverage at an affordable premium. It is one type of long-term investment schemes.
How Does a Life Insurance Term Plan Work?
When you purchase a life insurance term plan, the insurance company determines the premiums based on the policy’s value, your age, gender, and health. In some cases, a medical test may be required. The insurance provider may also require your current medications, driving record, occupation and family history.
If the policyholder passes away during the policy term, the insurance company will pay the sum assured to the nominees. This death benefit can be used to fulfil the financial needs of the policyholder’s family in case of an unfortunate demise. Some of the life insurance term plans offer maturity advantage upon the life assured’s survival till the completion of the entire policy term
Why Should You Invest in a Life Insurance Term Plan?
A life insurance term plans is basic life insurance policy that is actual charge effective and helps an individual in securing a commercially safe future for their loved ones. Here are the main reasons why you should spend in the best term plans.
- Affordable Premium Rates
Affording to the nature of the coverage provided under a term plan, the premium rates of a term plan are quite reasonable. An individual can avail high coverage benefit at nominal premium charges. It is also advisable to buying a life insurance term plan at a young age because older persons are extra prone diseases and need additional coverage, resulting in an increase of premium.
- Tax Savings
The major benefit of investing in the best term plan is that it can support you save money. Premium paid for a term plan succeed for tax benefits under Section 80C of the Income Tax Act up to Rs. 1.5 lakh. The death benefit under a term plan is also tax free under Section 10(10D) of the Income Tax Act. This is a key difference between traditional investments such as FD and life insurance plans like endowment plans. While you have to pay TDS on fixed deposits interest earnings, returns from an endowment plan are tax-free.
- Riders Benefits
Under a life insurance term plan, you can add extra coverage known as riders. They help in increasing the coverage limit under a term life insurance plan. The riders can be added to the policy in interchange of extra premium. About of the commonly opted life insurance term plan riders are Accidental Death Advantage, Accidental Total and Permanent Disability, Critical illness Rider, Waiver of Premium Rider etc.
- Financial Security
A life insurance term plan is known as a pure protection plan which helps an individual in providing economic safety to the family of the policyholder in case of an unfortunate demise. This can help the loved ones of the life certain to fulfil their financial needs in case the insured is not around
A life insurance term plan is a kind of life insurance that provides life cover to the insured at an affordable premium. You can ensure the financial safety of your loved ones in case anything unforeseen happens to you during the policy tenure with term plans.