Term insurance is the most affordable type of life insurance that provides financial protection to the insured's family in case of the policyholder's unfortunate death during the policy term. Term insurance protects your family and provides various benefits to the policyholder, such as tax benefits. So, in this article, we will explore the benefits of term insurance and why it can be an ideal choice for your family's financial well-being.
What is a Term Insurance Plan?
Term insurance is a pure and simple form of life insurance that acts as a pure protection plan. Its primary objective is to provide basic life cover to protect your family. In the unfortunate event of the untimely death of the insured person, the policy guarantees a predetermined sum assured as a death benefit to the family.
You must pay the premium amount to avail of the term life policy. You can choose the premium payment mode and frequency as per your preferences. Paying your premium on time is important to maintain your term policy coverage. As the sole breadwinner of your family, term insurance becomes essential to ensure their financial security in the event of your absence.
Benefits of Term Insurance
Term insurance offers several benefits, making it a popular choice for individuals seeking life insurance coverage. Here are some key benefits of term insurance:
-
Affordable Premiums
One of the primary benefits of term insurance is its affordability. Term insurance plans generally have lower premiums than other life insurance plans. This makes it accessible to many individuals, including young professionals, newlyweds, and those on a budget. With term insurance, you can secure a significant coverage amount without straining your finances.
-
Financial Protection for Dependents
The primary purpose of life insurance is to provide financial protection to your dependents in case of your death. Term insurance provides a substantial death benefit to your beneficiaries if you die during the policy term. This benefit can help compensate for lost income, cover living expenses, repay debts and secure the future of your loved ones.
-
Customizable Coverage Amounts
Term insurance policies offer the flexibility to choose the coverage amount that suits your family's needs. You can determine the appropriate coverage based on factors such as your income, outstanding loans, future financial goals and the needs of your dependents.
-
Term Insurance Tax Benefit
Life Insurance Companies offer various types of term insurance plans through which policyholders can avail of tax benefits on maturity benefits and premiums paid for life insurance. Term Insurance offers various tax benefits that you claim under sections 80D, 80D, and 10(10D) of the Income Tax Act of 1961.
-
Return of Premium Option
Term insurance plans provide life coverage to the nominee or beneficiary in case of the unexpected death of the assured person. These plans do not offer any maturity benefits on completion of the policy term. However, you can receive maturity benefits if you choose the Term Return of Premium Plan (TROP). With this option, you will have to pay a higher premium, but if you survive the policy term, the plan will refund the entire premium amount you paid.
-
Whole Life Cover
Term insurance plans provide coverage for the whole life of the policyholder. You can even extend your insurance policy term to 99 or 100 years of age. By buying these whole life insurance plans, policyholders can financially secure their dependents for their whole lives.
Benefits of Buying a Term Insurance Plan Early in Life
Purchasing a term insurance plan early in life offers numerous benefits that can significantly impact your financial well-being and that of your loved ones. Here are the key benefits of buying a term insurance plan early:
- Lower Premiums: A primary benefit of buying term insurance early is the opportunity to secure a lower premium. Insurance companies typically consider age, health and lifestyle factors when setting premiums. By obtaining coverage at a younger age, when you are generally healthy, you can lock in lower premium rates for the policy term. This can save you money in the long term.
- Longer Coverage Duration: Buying term insurance early allows you to opt for a longer coverage period. Term insurance policies can provide coverage for 10, 20, 30 years or even more. By purchasing a policy early, you can secure coverage for a significant portion of your life, providing comprehensive protection during important life stages, such as starting a family, paying off debt, or building wealth.
- Financial Security for Dependents: Term insurance is primarily designed to provide financial security to your dependents during your untimely death. By purchasing a term insurance plan early, you ensure that your loved ones are protected financially from an early stage.
- Coverage Despite Health Changes: As we age, our chances of developing health problems increase. By purchasing term insurance ahead of time, you can secure coverage while you remain in good health, regardless of any health changes in the future. This ensures that your existing term insurance policy will remain in force even if health conditions arise later in your life and will provide the necessary coverage.
- Flexibility and Customization: Purchasing term insurance early gives you more flexibility in customizing your coverage. You can choose the coverage amount, policy term and additional riders or benefits based on your specific needs and financial goals.
Conclusion
Term insurance offers a range of benefits that make it an attractive choice for individuals seeking affordable and effective life insurance protection. Its affordability, customizable coverage, and flexibility in addressing specific needs make it valuable for ensuring your loved ones' financial security. By choosing term insurance, you can enjoy peace of mind, knowing that your family will be financially protected in the face of life's uncertainties. Consult with our RenewBuy’s POSP Advisor to explore term insurance options and find the policy that best suits your unique needs and circumstances.
Benefits of Term Insurance FAQs
- What are the benefits of term insurance?
Ans. Term insurance offers several benefits, including affordability, flexibility in coverage amount and duration, financial protection for dependents, peace of mind, supplemental benefits through riders, convertibility options, and tax efficiency in estate planning.
- How is term insurance affordable?
Ans. Term insurance is generally more affordable compared to other types of life insurance. The premiums for term insurance policies are lower because they provide coverage for a specific term without any cash value component or investment element.
- Can I customize the coverage amount and duration in term insurance?
Ans. Yes, term insurance allows you to customize the coverage amount and duration based on your specific needs. You can choose a coverage amount that suits your financial obligations and select a term length that aligns with your goals.
- How does term insurance provide financial protection for dependents?
Ans. Term insurance ensures that if the insured person passes away during the policy term, their beneficiaries will receive a death benefit payout. This payout can help replace lost income, cover living expenses, pay off debts, and secure the dependents' financial future.
- Does term insurance provide any additional benefits?
Ans. Term insurance policies can offer additional benefits through riders. These riders can include features such as critical illness coverage, disability benefits, or accidental death benefits, providing extra financial protection in specific circumstances or events.
- Does term insurance provide any maturity benefits?
Ans. Typically, term insurance plans do not provide any maturity benefits or returns if the insured survives the policy term. However, Term Return of Premium (TROP) plans are available, and you can receive a refund of the premiums paid if you survive the policy term. Still, the premiums for such plans are usually higher.