5 Lakh Term Insurance 

This amount can help your family manage their daily expenses, clear short-term debts, or cover important needs like education or medical bills.

What is 5 Lakh Term Insurance?

A ₹5 lakh term insurance plans provide a life cover of ₹5,00,000 to the nominee in case of the policyholder’s death during the policy term. It is a pure protection term insurance plan, meaning there is no maturity benefit if you survive the term.

This type of plan is suitable for people looking for basic life cover at affordable premiums, especially first-time buyers, individuals with low liabilities, or those who want an additional layer of protection alongside other financial obligations. 

In this case, Saral Jeevan Bima allows a minimum life cover of Rs. 5 Lakhs, and therefore, you can buy one of these plans based on your suitability. 

How Does a ₹5 Lakh Term Insurance Plan Work?

Let’s understand how a 5 lakh term insurance plan works with the help of an example:

Suppose Ramesh, a 25-year-old salaried individual, buys a ₹5 lakh term insurance plans with a 20-year term. He pays a premium of ₹2,000 per year.

• If Ramesh passes away during the policy term, his nominee (say, his spouse) will receive ₹5 lakh as the death benefit.

• If he survives the term, there will be no payout (as this is a pure term plan).

Note: Check out the best term insurance plan in India and choose one that suits your requirements.

What are the Benefits of a ₹5 Lakh Term Insurance Policy?

Here are the key benefits of a term insurance for 5 lakhs cover:

• Financial Support for Family: This type of life insurance helps the nominee manage basic expenses like rent, education fees, or emergency needs.

• Low Premium Burden: The 5 lakh term plan cover is ideal for individuals who want to start with basic coverage without straining their budget.

• Tax Benefits: Premiums paid are eligible for deduction under Section 80C, and the death benefit is tax-free under Section 10(10D) of the Income Tax Act.

• Ease of Purchase: Most insurers allow online purchase of such plans with minimal documentation and instant issuance.

• Quick Issuance: Many insurers offer instant or simplified issuance for low sum assured plans like ₹5 lakh, often requiring no medical tests if you meet basic eligibility criteria.

What are the Key Features of ₹5 Lakh Term Insurance?

Here are the key features of a 5 lakh term insurance plan:

• Affordable Premiums: The 5 lakh term insurance premiums are lower compared to plans with higher cover amounts.

• Fixed Sum Assured: Your nominee will receive ₹5 lakh as a death benefit during the policy term.

• Customisable Policy Term: You can choose a suitable policy term and customise the plan depending on your age and financial needs.

• Flexible Premium Payment: 5 lakh term insurance premiums can be paid monthly, quarterly, yearly, or as a one-time lump sum (single pay).

• Add-on Riders Available: Various term insurance riders like accidental death benefit or critical illness cover can be added for enhanced protection.

Note: It is suggested to calculate the term plan premium on the term insurance calculator online tool by Policybazaar before buying the plan.

Why Buy 5 Lakh Term Insurance Plan? 

Here are some of the valid reasons why you should consider buying the 5 Lakh Term Insurance plan:

• High cover at affordable premiums: Many believe that the 5 lakh term insurance premiums will be much higher, but that is not the case. The premiums for a 5 lakh term plan are budget-friendly, allowing you to get the required coverage without straining your budget.

• Providing Financial Assistance to Your Family: The 5 Lakh Term Insurance plan makes sure that your loved ones’ financial requirements are addressed in your absence. Also, the nominees have the flexibility to use the death benefit for settling loans and managing debts, or for covering various expenses towards household and personal needs.

• Pay off Loans/Debts: When buying a term insurance for 5 Lakh sum assured, you can make sure that your family isn’t burdened with pending loans/debts if you’re not there around them.

• Seamless Online Purchase: Buying a 5 Lakh Term Insurance plan online is quite hassle-free, and eliminates the need to visit insurer’s branch or wait in long queues. With Policybazaar, you can very easily make the purchase from the comfort of your home and enjoy a 15% discount on online term plan purchases on the Policybazaar website or app.

• Flexible Payout Options: Unlike many insurers that offer death benefits of life insurance plans in a lump sum mode, you have the flexibility to choose from various payout methods. For instance, you can choose the combination of a lump sum or the monthly income payout option, depending on your requirements and situation.

• Tax Benefits: Another significant benefit of buying the term insurance for 5 Lakhs is eligibility for tax deductions under sections 80C and 10(10D) of the Income Tax Act, 1961.

Note: Know what is term insurance first and then buy a term plan for your loved ones.

Final Thoughts

A ₹5 lakh term insurance plan can be a simple, affordable, and meaningful start to securing your family’s financial future. While it may not offer high coverage, it provides basic protection at a low cost. It is especially useful for young earners, individuals in low-income groups, or those seeking a supplementary layer of coverage.

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