People take a life insurance policy to protect their loved ones from the uncertainties of the future. When it comes to buying a life insurance policy, you will come across different type of polices. Term insurance plan is among the most popular type of insurance policy and for many reasons.
The primary objective of the term insurance policy is to offers coverage in a way of death benefits the nominee in case the insured individuals expire during the term time period. Below, we are highlighting some of the prominent advantages associated with term insurance plan –
Get High Coverage at Lower Premiums
A popular advantage of term insurance is the fact it is quite affordable especially if you invest in an online term plan. Compared to all other life insurance policy, this allows people to take insurance an optimal amount, in turn, acquire financial stability for their family.
The high premium rates of other time of life insurance plan make it difficult for individuals to take a life insurance policy. When you take a life insurance policy, it should be 10 times the overall annual income or adequate to cater to the living expenses of your dear ones in the future. Term insurance plans can offer your adequate coverage without you having to pay a high amount of premium.
Comprehensive Future Financial Security
Acquiring high coverage at low premiums is an integral aspect, which makes term plan different from other types of insurance policies. Other life insurance policies provide you with secure terms, lifelong annuities, or periodic money back, but term plans extend the option of obtaining large coverage sum at a low cost. This will enable you to obtain comprehensive financial security without a burning a hole into your pocket.
No Components of Saving
Various life insurance plans, such as money back plan or endowment plan have multiple saving elements. They might promise to pay or maturity benefit if the insured survive during the plan or death benefit if the person expired during the term plan period. However, term plans have no such saving aspect, apart from returning of premium in certain term plans. The insured will can only avail benefit in case of maturity of death.
Harness Tax Benefits
Tax benefits associated with a term insurance policy is an important benefit to consider. A person who is insured under the term plan receives the following benefits –
- Section 80 C – This section allows you to acquire tax advantage on the monthly, quarterly, or annual premium that you pay towards the policy. Premium paid up to INR 1.5 lakhs are eligible for tax exemption.
- Section 10 (10 D) – Term insurance plans provide a specific payout on the death or maturity of the policyholder. The maturity amount is completely exempted under this section.
Term insurance proves to be effective if the insured individual is the only breadwinner in the family. It helps in reducing the financial burden on the family, in case the insured person expires. Above are some prominent reasons why people should invest in a term insurance plan.