Term insurance is a type of life insurance that provides the policyholder with limited financial protection. The firm pays the beneficiary the death benefit in the event that the insured person passes away within the period of the policy. Before purchasing term insurance, one should be aware of the primary benefits and reasons to choose it.
The goal of purchasing life insurance is to give the insured life protection and financial stability for his family.
How Term Insurance Works
A basic financial tool that should ideally be included in everyone’s investment portfolio is the term plan, a conventional insurance policy that is available to everyone. Any person who makes financial contributions to the family and has parents who are reliant on them or have other obligations should choose term insurance since it provides a safety net in the case of a person’s passing.
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FEATURES OF TERM INSURANCE
Larger life insurance
A person may choose a larger life cover for the same premium as an endowment plan because term life insurance products are less expensive. For instance, by paying a premium, a 30-year-old can get a term plan with a cover of Rs. 1 crore for a 30-year period.
Riders The term plan’s usefulness can be increased by the policyholder by adding riders to it. He is therefore eligible to receive the sum promised upon being diagnosed with the critical illness by choosing, for example, a critical illness rider or critical illness plan. This is in addition to the death benefit, which is an equivalent sum paid out within the policy’s term upon death.
Enhanced cover
Some insurance providers provide the customer with the choice to increase the life insurance throughout crucial times in their life. For instance, when the policyholder marries and when they have children, their life insurance coverage may be increased by 50% and 25%, respectively. As a result, he can start with a low level of protection and raise it when his commitments increase and his ability to pay a larger premium rises.
Numerous tax advantages may also come with purchasing term insurance. The sum assured that a policyholder gets upon the plan’s maturity is tax-free under section 10 (10D) of the Income Tax Act, this also holds true in the event that the individual covered surrenders their policy or passes away. Additionally, under section 10 (10D), the bonuses obtained with this sum are likewise tax-exempt.
Innovative elements
Insurance firms have generally been eager to develop, but term plans have seen the most innovation from them. For instance, businesses have been prompt and aggressive in reducing premium prices and sometimes providing additional savings to specific categories, like as non-smokers
Who should get term life insurance?
Plans for term insurance are available to anyone. They provide life insurance at low costs for everyone, whether they are company owners or salaried workers. At any age, they provide a great buffer against life’s uncertainties. Starting with a plan that offers high coverage for a cheap premium is a wise choice for individuals who are in their 20s, while it also offers solid protection from financial risk for those who are in their 30s and have expanding families and rising responsibilities. Term insurance can provide sufficient coverage for obligations like children’s schooling and weddings for people in their late 40s and 50s as well, allowing them to plan for their retirement.
FAQs
Q1-Can more than one claim be considered?
Ans- Multiple claims from various insurers may be taken into consideration as long as their specifics were disclosed when the insurance was purchased.
Q2-Can NRIs purchase term life insurance in India?
Yes. NRIs with dual citizenship who meet the requirements to be Indian citizens may buy term insurance in India.
Q3-What tax advantages are available for a typical term insurance plan?
A term insurance plan is eligible for tax advantages under Section 80C up to a maximum of Rs. 1.5 Lac in any given fiscal year.
Q4-Do term insurance policies offer maturity proceeds?
Many insurance companies now provide the return of premium provision, which permits the policyholder to receive the paid premiums in the case of plan maturity, although this raises the payable premiums.