- Rs. 1 CroreTerm Cover @Rs 16/Day
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- 7 Lac+Families Secured
Benefits of Term Insurance
- DetailsWritten by PolicyBazaar -
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Updated date : 16 January 2020
An eventuality can happen anytime, anywhere and with anyone. When you can't avoid the fate, the only way is to be prepared for this. Have you ever thought what will happen to your family in your absence? Are they capable enough to bear the unexpected financial burden once you left?
The best way you can provide financial security to your loved ones is to have a term insurance plan. The benefits of term insurance ensures financial stability to your family in case of any eventuality. The major advantage of term insurance plan is that it works as a risk cover plan, which minimises the financial risks and take care of the liabilities in case of an unfortunate circumstances.
A term life insurance offers insurance coverage in form of death benefit to the beneficiary of the policy in case of uncertain demise of the insured person. Apart from providing financial security to the loved ones, there are many other benefits of having a term insurance plan. let’s take a look at it.
List of key benefits of term insurance
The need to purchase term insurance plan varies from person to person, but some of the most common term insurance benefits, which influences the individual to buy a term insurance plan are:
- Term insurance for a Secured Family
- Term insurance Plan Helps to Take Care of the Liabilities
- Nuclear Families Benefit a Lot through Term insurance
- Term insurance is More Affordable
- Tax Benefits of Term Insurance
- Death Benefits
- Riders Benefits
- Term Insurance with Maturity Benefits
Here are the in brief explanation of above term insurance benefits.
1. Term Insurance for a Secured Family
It is imperative to have a term insurance plan, if you are the sole bread earner of your family, as term insurance plan provides life coverage to the family of the insured in case of an unfortunate event. In case of an unfortunate event. It provides financial protection to family and take care of the liabilities in your absence. Thus, with a term insurance your family can be financially secured and maintain a good lifestyle even in your absence.
2. Term insurance Plan Helps to Take Care of the Liabilities
Generally, people have a tendency to take lot of liabilities in their life such as purchasing a home, buying a brand new car, etc. Many of these liabilities are usually paid over a period of time and in-case something happens to you the burden to repay these responsibilities comes directly on the family unless you have term insurance. A term insurance arms your dependents to manage aforesaid financial problems.
3. Nuclear Families Benefit a Lot through Term insurance
Unlike old times, there are far less joint families. These days, the only support system to your family could be you. If you don’t buy term insurance, in your absence, circumstances could get very tough to handle. Term insurance deals with any financial repercussions in your absence.
4. Term insurance is More Affordable
Unlike any other life insurance product you can buy term insurance plan at an affordable cost, e.g., a risk cover of Rs. 50 Lakhs for an individual with an age of 25yrs could be as low as Rs. 4184 annually, i.e., less than Rs. 12per day. The monthly premium of a term insurance comes down if an individual purchase it at an early age.
5. Tax Benefits of Term Insurance
A term insurance policy provides tax benefit under two different sections of the Income Tax Act. These sections are
- Section 80C- Under this section of Income Tax Act, you can avail tax benefit on the premium paid towards the policy. The premium paid towards term insurance, up to maximum limit of Rs.1.5 Lakhs are eligible for tax exemption U/S 80C of IT Act 1961.
- Section 10(10D) - The maturity benefit offered by some of the term insurance policy (specifically Term Return of Premium Plan TROP) are also eligible for tax exemption under section 10(10D) of Income Tax Act 1961.
6. Death Benefit
Death benefit is the total sum assured amount offered to the beneficiary of the policy by the insurer in case of uncertain demise of the insured person.
7. Rider Benefit
Term insurance plan offers add-on coverage as rider benefit in order to enhance the coverage of the policy. The rider benefit can be purchased by the insured by paying an extra premium along with the basic premium of the policy.
8. Term Insurance with Maturity Benefits
A pure term insurance plan only offers insurance coverage in form of death benefit to the beneficiary of the policy. There is no maturity benefit offered by term insurance plan. However, specific plan such as TROP (Term Return of Premium Plan) offers maturity benefit in form of premium return in case the insured survives the entire tenure of the policy.
Why to buy term insurance?
Everybody believes nothing can happen to them, however, there is always an element of concern or risk which prevails that, ‘What If?’ The term insurance is specifically bought to cover this concern of ‘What If?’ and all the financial trauma arising out of that risk. With an extensive range of term insurance plans available in the market, the insurance buyers can choose to purchase a plan, which suits their requirement. Moreover, the insurance buyers can also make use of term insurance calculator in order to determine the exact amount of premium they will be required to pay towards the policy.
How much term insurance cover do I need?
The general thumb rule says a person should buy term insurance cover which is 8 times the annual income, i.e., if I today earn Rs. 5Lacs per annum then the amount of Term insurance Cover chosen should be around 40 Lacs.
Many term Insurance plans also offer you a possibility to increase your sum assured to an X% year on year, thus keeping you adequately insured. In order to calculate a more accurate value you can log on to www.policybazaar.com and check your exact term insurance cover requirement by using our term insurance calculator.
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