Term Life Insurance: Everything You Need to Know About Its Benefits (S:81, C:67)
Term life insurance is an excellent option for the financial protection of you and your loved ones, as it offers comprehensive coverage. By getting this cover, you can live a relaxed life, as you and your family have protection against unpredictable times.
Being aware of how this insurance plan works allows you to understand its importance for your financial health. Here is a quick overview of a term insurance plan, its features and benefits, and how to choose an ideal plan from the plethora of options.
Introduction to the Term Insurance Plan
It is a legally binding contract between the policyholder and the insurance providing term benefits. Here, the ‘term’ refers to the period until the insured individual’s demise. In such circumstances, your family member will get an assured sum as a death benefit.
Ever since COVID-19, the importance of health and term life insurance plans has increased many folds. You can customise a cost-effective and flexible insurance plan to get an affordable premium when you opt for a term plan. Additionally, it comes with tax benefits, helping you reduce tax liability.
Features and Benefits of Term Insurance
Here are some advantages you can enjoy when you get this plan.
Financial Protection
A key feature is that it provides the beneficiary with a fixed amount in case of the policyholder’s demise. This ensures that your loved ones are financially protected, especially if they depend on you.
You can nominate any family member as a beneficiary. This benefit helps them manage financial obligations, such as paying children’s school fees, EMIs, and everyday expenses, without much hassle.
Tax Benefits
You are eligible to claim deductions of up to ₹1.5 Lakhs under Section 80C of the Income Tax Act of 1961 on the premiums paid. If you opt for a critical illness add-on cover, you can also claim benefits under Section 80D.
Furthermore, death benefits to the beneficiary are also exempt from taxation under Section 10(10D) of the Income Tax Act. All these apply as per the prevailing tax norms.
Lower Premiums
Most premiums start at just a few hundred rupees, allowing you to secure your family’s financial health. Remember, the earlier you get the insurance, the lower the premium amount you will have to pay.
This is because insurance companies assume that younger policyholders are at a lower risk of untimely death. They also have a longer period to pay the insurance premium, which lowers the liability to cover the premium amount annually. Some insurance providers also offer lower premiums for housewives.
Customisable Plan
When you get such coverage for you and your family, you can choose the benefits you want to add and the premium amount. You can choose additional riders for extra protection by paying a small extra amount. While this may increase your liability, it can help you save lakhs in the future.
Critical Illness Cover
This is a type of add-on cover which you can opt for. It provides a lump sum payment when you are diagnosed with a critical illness, such as cancer, blindness, kidney failure, etc. These funds allow you to manage your treatment expenses and compensate for the loss of income.
Income Replacement
You can also choose a monthly payout option to get regular income from your insurance plan. Some insurance companies also allow you to opt for quarterly, annual, or a combination of both, as per your preference.
Life Coverage
While a life insurance policy provides benefits until maturity, term insurance offers coverage for a specific period. For most term insurance plans, the maximum age for coverage is typically 99 years.
Tips for Choosing the Best Plan
Now that you are aware of its benefits, here are a few smart tips for choosing the best plan.
- Evaluate your current lifestyle and choose a coverage and add-on riders accordingly
- Invest early to avoid paying high premiums
- Read online reviews from customers to get accurate information about the insurance company
- Use an insurance premium calculator to calculate your approximate monthly premium amount
- Compare the claim settlement ratio of the insurer and opt for the option with the highest ratio
- Add a critical illness cover to protect against the diagnosis of any life-threatening condition
- Compare premium costs to choose the most affordable option
With these tips, you can opt for a plan that meets all your financial and coverage requirements. You can easily compare and customise your plan on the online marketplace. Bajaj Markets is a financial services marketplace that allows you to choose plans from reputed insurance companies.
Here, you can save time by applying in a few clicks and with minimal documents. However, it is important to read all the documents carefully and understand the terms and conditions before signing up.