Term insurance has become an increasingly popular form of insurance over the past few years. With life expectancy rising, costs of living mounting, and inflation soaring, term insurance provides financial protection to your family in case of your unexpected demise.
While buying insurance, most people focus only on the premium amount and coverage offered. However, it is equally important to understand the benefits of term insurance to make an informed purchase decision. This blog post will help you know the top 5 benefits of a term insurance plan.
Top 5 Benefits of Term Insurance
Here are five key benefits of term insurance you must know:
1. Financial Security for Your Family
The primary benefit of term insurance is that it provides financial security to your family when you are not around. The insurance company pays your nominee a lump sum (sum assured) in case of your untimely death during the policy term.
Your family can use this money to pay off debts, fund children’s education and weddings, and manage household expenses without financial hardship. Term insurance ensures that your family’s lifestyle and goals remain unaffected even in your absence.
2. Affordable Premiums
Compared to other types of life insurance, term insurance comes at highly affordable premiums. Moreover, premium rates remain unchanged over the tenure of the term plan, provided you do not renew or extend it.
This offers budget flexibility as you know how much you must pay yearly to continue the coverage. This primarily benefits people in their early careers or with constrained budgets. You can easily buy a reasonably high coverage even with limited funds.
3. Customisable Coverage
Term insurance plans are highly flexible and customisable. You can customise them according to your specific protection needs. You can choose the sum assured, policy tenure, and payout structure according to your financial requirements and income level.
Most insurers even allow you to choose from optional riders like critical illness and disability cover to enhance your coverage. Such feature flexibility makes term insurance plans an adaptable option for policyholders with different priorities.
4. Tax Benefits
Term insurance policies can qualify you for income tax exemptions under Section 80C and Section 10 (10D) of the Income Tax Act. You can claim deductions of up to ₹1.5 lakhs on premiums paid towards your term plan every financial year.
The death benefit payout your nominees receive is tax-free without any upper limit. Availing tax savings on term insurance can further sweeten the deal for you and reduce the effective outgo from your pocket.
5. Simplified Buying Process
Insurers today offer term insurance plans online. This makes the process of purchasing a term insurance plan quick and hassle-free. The proposal form takes only 10-15 minutes to fill. Medical tests are also minimal depending on your age and the assured sum you have opted for.
You can compare various term insurance plans on parameters like claim settlement ratio, premium rates, and policy features online. This simplifies the evaluation process so you can zero in on the best term plan according to your priorities.
Conclusion
Term insurance is a low-cost product offering high life cover to protect your loved ones financially when you are gone. It provides ample flexibility in customisation, hassle-free buying, and tax savings, making it a simple yet beneficial investment. Evaluate your family’s financial needs and invest in a term insurance policy to give them a financially secure future even in your absence.
