Term Life Insurance Policy Benefits, Definition, Plan, Calculation & Review

When it comes to life insurance, there are two main types: term and whole life. Term life insurance is the most basic and affordable type of policy. It provides coverage for a specific period of time (the “term”), and if you die during that time, your beneficiaries receive a payment equal to the policy’s face value. If you’re still alive when the term ends, your policy expires and you don’t receive anything back. Read on to learn more about term life insurance policies and whether they might be right for you.

A term insurance plan is a type of life insurance plan that provides compensation to the beneficiary for the unfortunate loss of the life assured during the policy tenure. A sum assured known as death benefit is provided to the nominee/family of the life assured in case of an unforeseen demise of the life assured during the policy tenure. Term Insurance Policy Benefits, Plan, Calculation & Review which helps an individual to financially secure your loved ones in their absence.

This type of life insurance provides a financial benefit to the nominee in case of the unfortunate demise of the insured during the policy term. Term Insurance policies provide high life cover at lower premiums. For e.g.: Premium for ₹ 1 Crore Term Insurance cover could be as low as ₹ 485* p.m and Term Insurance Policy Benefits, Plan, Calculation & Review.

Term Insurance Benefits

Term insurance helps you secure your family financially in case you are not around. Term insurance plans are considered to be one of the most important types of life insurance plans that one should buy in today’s time. Term insurance not only provides financial protection to your family in the most unfortunate events but also provides you tax benefits. Not only this, you can avail various other benefits available with term plans. Check these term insurance benefits below.

What are the Benefits of Term Insurance

Following is a list of benefits that a term insurance policy can provide you:

  • High Sum Assured at Affordable Premium
  • Easy to Understand
  • Multiple Death Benefit Payout Options
  • Additional Riders
  • Income Tax Benefits
  • Critical Illness Coverage
  • Accidental Death Benefit Coverage
  • Return of Premium Option

Best Term Insurance Policy

Anyone with financial dependents should buy a Term Insurance Policy. This includes married couples, parents, business people and self-employed, SIP investors, young professionals with dependent parents, and in some cases, even retirees.

Parents: Parents are generally the sole source of financial support for their children. The needs of children extend from school fees and living expenses to hefty university fees, later on in life. An unfortunate event with a parent can jeopardise their future and deprive children of life’s opportunities.

Newly Married Couple: Roses, chocolates and movie tickets are great, but here’s a truly long-lasting gift for your spouse – term insurance. This gift will give your spouse more than momentary joy, and it will secure their future. Term Insurance assures the spouse of financial support in case of a mishap with the insured person. Purchased as soon as possible by married couples.

Working Women: The women of today are on an equal footing with men, whether it be managing their finances or providing for their family. Today, a family is as dependent on the woman’s income as it is on the man’s. This dependency brings with it the need to financially secure your loved ones in case something happens to you.

Young Professionals: Young professionals are just starting their careers. Many of them are not yet marriage. Have no financial dependents. However this is likely to change in the future as they get married. Support their parents/relatives. Such individuals should buy term insurance now rather than wait. This once a policy is purchase.

Taxpayers: Term Insurance premiums paid are allowed as a deduction from taxable income under Section 80C^^ of the Income Tax Act, 1961^^. The term insurance payouts on maturity are also exempt from tax subject to conditions under Section 10(10D)^^. Hence taxpayers can use term insurance to reduce their tax burden significantly.

Self Employed: As a self-employed person, you face many challenges. Unlike salaried individuals, you do not earn a fixed monthly income; you have an uneven source of income that depends on the ups and downs of the market. Plus, you may have also taken a business or personal loan from creditors, banks, or even your family and friends.

SIP Investors: Investors in mutual fund SIPs (Systematic Investment Plan) invest a fixed amount every month in a mutual fund. The wealth creation in an SIP is driven by a stream of regular instalments which compound over time. However, an unfortunate event of the investor can stop the flow of instalments.

Retirees: Retired persons need to have term insurance if they have dependant spouses or families. Buying term life insurance can also be a way of leaving an inheritance for their families. This is because, Term Insurance is paid out to nominees in case of any mishap with the insured person. The payment of Term Insurance is also tax-free subject to conditions under Section 10(10D)^^ of the Income Tax Act,1961^^

Term Plan Work

A term insurance plan is a type of life insurance plan that provides compensation to the beneficiary for the unfortunate loss of the life assured during the policy tenure. A sum assured known as death benefit is provided to the nominee/family of the life assured in case of an unforeseen demise of the life assured during the policy tenure.

Term Insurance Reasons

Term insurance plans are the basic type of life insurance policy which are very cost effective and help a person in securing a financially protected future for their loved ones. Below mentioned are some reasons why you should invest in a term insurance policy:

Affordable Premiums

According to the nature of the coverage provided under a term insurance policy the premiums of a term insurance policy are quite affordable. An individual can avail high coverage at nominal premiums rates. It is also advised to purchase a term insurance policy at a young age because older people are more prone to diseases and require more coverage which increases the premium.

Tax Savings

A major advantage of purchasing a term insurance plan is that it can help you save taxes. Premium paid for a term insurance policy qualify for tax benefits under Section 80C of the Income Tax Act for up to Rs. 1.5 Lakh. Death/Maturity under a term insurance policy are also tax free according to the Section 10(10D) of the Income Tax Act.

Option Add Riders

Under a term insurance policy you can add additional coverages known as riders which help in increasing the scope of coverage under a term insurance policy. The riders can be added to the term insurance policy in exchange of additional premium. Some commonly opted life insurance riders are Accidental Death Benefit, Accidental Total and Permanent Disability, Critical Illness Rider, Waiver of Premium Rider etc.

Financial Security

A term insurance policy is known as pure protection plans which help in providing financial security to the family of the life assured in case of an unforeseen demise of the life assured during the coverage period. The death benefit shall be provided to the nominee.

Josephina Julia

Hi, I'm Josephina Julia here to Write on the Customer Care Category. I research every Organization, Company & Institute Helpline, Support Information, Call Center, Official Email Address, Website, Physical Support Center like Customer Care Point (Service Point), Customer Care Center and More. Anyone can contact me at josephinajulia@yearlynews.com
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