7 Reasons Why Term Insurance is Important 

Why Term Insurance is Important?

To understand why term insurance is important, we need to understand what is term insurance. Term insurance is basically a type of life insurance plan that provides long term coverage at really affordable premiums. This is because it is a pure risk protection plan that provides death benefits in case of the policyholder’s unfortunate death during the policy term. The family of the policyholder can use the benefit amount to take care of their financial obligations like rent, the child’s fees, and pay off any remaining debts like home loans.

In case the policyholder outlives the policy term, regular term plans do not offer any benefit amount. However, if you want to receive a maturity benefit, you can opt for the term return of premium plans that return all the premiums paid throughout the policy, at the end of the policy term. The policyholder can use this maturity benefit payout to fulfill his/her lifelong goals like buying a house or paying for the child’s wedding.

Not just that, you can also purchase a 100% refund of premium at no cost term plans if you are uncertain about your retirement age. With this plan, you can exit the policy at a specific age and receive all the premiums paid at the policy termination. The policyholder can use this refund of premium payable at the end of the policy to secure their retirement and maintain their financial independence.

Top 7 Benefits of Buying Term Insurance

Let us see why term insurance is beneficial to buy in 2023:

• Financial Protection: Term insurance plans provide a death benefit to the family/nominee of the policyholder in case of the policyholder’s unfortunate death during the policy term. Your family can use this benefit payout to take care of their financial obligations like loans and other monthly expenses. This means term insurance plans secure your family’s financial future even when you are not around them. 

• Affordable Premiums: You can buy term plans for a large life cover at budget-friendly prices for a long policy tenure. For example, a term plan for a 1 Crore life cover will cost you Rs. 384 on a monthly basis.

  You can also choose to pay the premiums for the entire premium payment term, limited premium payments, or pay the entire premium in a single payment. You can select suitable premium payment modes like monthly, quarterly, annually, and semi-annually under the limited and regular premium payment terms.

• Long-Term Coverage: Term insurance can provide you with the option to choose the most suitable cover period. Most term plans offer a flexible policy cover of 5 of 40 years. You can also ensure your family’s financial security for the long term by buying a whole life insurance that provides coverage for the whole life i.e., till 99/100 years of age. 

• Death Benefit Payout Options: The term plans in India offer the option to choose the payout option and select if they want the benefit amount to be paid in a lump sum, monthly income, or a combination of the lump sum and monthly income.

• Low Claim Rejection: At the time of policy purchase, make sure to provide all the information accurately to the best of your knowledge on topics like age, date of birth, medical conditions, finances, lifestyle habits, and more. This is because providing the correct information at the time of policy purchase ensures your family’s claim in your absence will not be rejected. As per the recent Insurance Regulatory and Development Authority (IRDA) mandate, no insurance company can claim that there has been a non-disclosure of facts after two years of the policy becoming effective.

• Rider Benefits: Various term insurance plans offer the option of adding riders to the base plan to increase the plan’s coverage. You can add the important term insurance riders at nominal premiums and receive coverage against a variety of eventualities. For example, term insurance plans provide you lump sum payments in case of a diagnosis of terminal illnesses like AIDS. 

  The most common term insurance riders available in India are as follows:

  • Hospicare riders, 

  • Accidental death benefit riders, 

  • Accidental total permanent disability riders, 

  • Terminal illness riders, 

  • Critical illness riders, and 

  • Waiver of premium riders.

• Income Tax Benefits: You can claim term insurance tax benefits on premium amounts paid under sections 80C, along with the premium amount paid towards the benefit of critical illness u/s 80D. The lump sum payment received by the nominees/beneficiaries as a sum assured (death benefit) is exempted from tax deductions u/s 10(10D) of the Income Tax Act of 1961. The tax benefits of term insurance are subject to change as per the prevailing tax laws. 

Why Buy Term Insurance Online?

Here is a list of reasons why term insurance should be purchased online:

• Buy life cover at lower Premiums with 5% discount 

  Insurance companies in India often offer lower premiums online as compared to offline because of the removal of the agent’s commission. Thus customers can get up to a 5% discount on online purchases of term insurance.

• Easy to Purchase

  You can buy term plan online from the comfort of your home in just a few clicks. All you need to do is enter your basic information, select the best term insurance plans as per your needs, and proceed to pay.

• Compare term plans online in a couple of clicks 

  You can easily compare term plans online as you don’t have to visit the various company offices and compare the term insurance benefits manually. You can easily compare term plans side by side on policybazaar, by clicking on the ‘compare plans’ option at the top-right corner, selecting the suitable plans, and comparing the benefits of 3 plans on the desktop side by side online.

• Paperless and hassle-free process 

  The entire process of buying and maintaining term insurance online is paperless. Thus it removes the hassle of carrying physical policy documents everywhere you go.

• Easily available for NRIs

  Indians living outside India can also buy term insurance for NRIs from their current residential country without traveling all the way back to India by scheduling their medicals via tele or video mediums.

How To Buy Term Insurance in 2023?

Let us take a look at how you can buy term insurance online.

• Step 1: Visit the term insurance page

• Step 2: Fill in the required information like name, gender, date of birth, and contact information

• Step 3: Click on ‘View Plans’ and enter your occupation type, smoking habits, annual income, and educational qualifications

• Step 4: Select the most suitable plan and proceed to pay

Wrapping it Up!

To get a better understanding of why term insurance is important, we need to know that term insurance is an important financial product that can help you secure your family in case of an eventuality. These plans also provide tax benefits so you can save further on the premiums paid and receive benefits tax-free as per the prevailing tax laws.

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