What are the Benefits of Term Insurance policy?
You might have numerous financial goals, but life is unpredictable, and you don’t know what’s there in the next moment. Sudden death can risk these objectives as well as can leave your family in a stressful situation. In such troublesome occasions, however, no measure of cash can supplant the absence of a dear one; yet, a term insurance plan financially secured your family when you are not with them.
Term life insurance is a sort of extra security plan that gives death benefit to the policyholders for a fixed-term period. That is, in the event that the policyholder bites the dust during the policy term, at that point, the insurance coverage amount is given to the beneficiary of the policy.
A term insurance plan doesn’t give maturity benefits like conventional, money back or market-linked life insurance policies, yet offer a lot higher insurance coverage for a lesser premium amount.
In this blog, we clarify what term insurance is and inform you about the major benefits of term life insurance.
Term Insurance Plans are easy to comprehend: Simplicity is one of the primary reasons for the increasing popularity of term plans. Term insurance policy is a pure protection plan that centers around offering your dependents financial security in the form of a lump-sum insurance coverage amount in case of your demise. All you require to make sure is that the premium is paid as per its schedule. Term insurance premiums are as low as 0.1 percent of the total sum assured.
Term Plans offer a lot higher sum assured in contrast with conventional plans: The total insurance coverage amounts for ULIP, endowment and other traditional policies are around 7 to 10 percent of the yearly premium. So for instance, if you pay an annual premium of Rs 20,000 then according to the plans mentioned about you will get a coverage of Rs 2 lakh which will scarcely cover your family’s costs for a couple of months.
Whereas, a term insurance policy offers a higher sum assured at a considerably low premium cost, ensuring that there are enough funds for the family such that they don’t experience budgetary difficulty in your absence. The cover that term insurance policy offer is about 60 times higher as compared to ULIP and other conventional policies.
Premiums are fixed throughout the term of the policy: When you buy a term insurance plan, you are viably locking the premium for your entire policy term. And this is why it turns out to be profoundly useful for you to start your term plan as early as possible that means in your younger age. Let’s take an example – if you buy a term plan worth coverage of Rs 1 crore at the age of 30 years then the premium would be around Rs 10,000, and in case you buy the same policy at 45 years of age then the premium would come about Rs 30,000.
Term plans offer a host of tax benefits: While the essential purpose behind purchasing term insurance plan is making sure about your family’s future; however, you additionally get the benefit of tax deduction. So, how about we take a gander at its three term insurance tax benefits.
- Segment 80C: You can avail up to Rs 1.5 lakh yearly for the premiums paid towards term insurance policy along with certain other investment and purchases under Section 80C of Income Tax Act.
- Section 80D: This exclusion is permitted on the premiums paid towards health insurance coverage such as critical illness riders. You can claim up to Rs 25,000 for the premium paid towards it.
- Section 10 (10D): This benefit is available on insurance coverage payout wherein the whole sum is totally excluded from the taxes.
So, as talked about in the article, term insurance has a few advantages. It gives higher insurance coverage to a lower premium; it’s easy to comprehend and accompanies several tax breaks. However, before calculating all the benefits, you ought to remember the main objective of term insurance is protection and not savings. Therefore, it is imperative for you to understand your requirements and know the benefits of term life insurance, such that you can make a sound decision. To learn more about term plans, visit BimaKaro.in today, get free customised quotes based on your eligibility and requirement and then make your pick.