Term Life Insurance
When it comes to long-term financial planning, a term life insurance plan is what an individual requires the most. Term insurance is the purest form of life insurance policy as it offers financial protection to your family against uncertainties of life.
In simple words, term life insurance is an agreement between the insured and the insurance company, where the company has to pay a specific sum to the insured person’s family, in case of his untimely demise (within the policy period).
Features of Term Life Insurance
1.
Policy Term
Policy term refers to the number of years for which the term insurance provides coverage. In case of an untimely demise during this period, the nominee will receive the sum assured as per the policy. Term insurance tenure can start from 5 years, but if you select the whole life insurance option, it can extend up to your 99th birthday.
2.
Cover against Eventualities
If you are the sole earner of the family, a term insurance plan will keep your family secure from financial challenges if any unfortunate event occurs. A term insurance plan provides a life cover at affordable premiums that can help support the financial future of your family.
3.
Add-on Riders
Once you have purchased your term insurance plan, you can add riders or add-on benefits to extend its scope. There are various types of riders available that can be added to your base coverage at a nominal cost. Some of these include critical illness riders, accidental death cover, etc.
4.
Tax Benefits
As a taxpayer, it is important to know about the tax benefits before you buy term insurance. Under Section 80C of the IT Act, 1961, you can avail of tax benefits up to INR 1.5 lakh on the premium paid. Not only this, but with an add-on health-related rider, you can claim additional tax benefits on the premium paid under Section 80D. The payouts are also tax-exempt under Section 10(10D).
5.
Premium Waiver
With this, your future premiums are waived off in case of any disability caused by an accident. This means that if you fail to pay the premiums, you will still be able to keep your family’s financial future secure.
6.
Flexibility inPremium Payments
As a taxpayer, it is important to know about the tax benefits before you buy term insurance. Under Section 80C of the IT Act, 1961, you can avail of tax benefits up to INR 1.5 lakh on the premium paid. Not only this, but with an add-on health-related rider, you can claim additional tax benefits on the premium paid under Section 80D. The payouts are also tax-exempt under Section 10(10D).
Why do you need Term Insurance?
The first and foremost reason to buy a term plan is that it will take care of your family’s monthly financial needs in your absence. Also, if you have taken any sort of loan, such as a home loan, personal loan, or education loan, the proceeds from your term plan can pay off your loans. Thus, ensuring that your family is not put under the financial burden after you.
Another reason everyone must buy term insurance is the increased cases of lifestyle diseases and critical illnesses. And at a later stage in life, the probability of developing such medical conditions increases significantly. A term insurance plan can offer protection against critical illnesses during your lifetime.
