Term insurance enables you to protect your family’s finances in the event of your passing. One of the most significant categories of life insurance that a person should purchase nowadays is term insurance. Term insurance offers tax advantages in addition to giving your family financial security in the worst-case scenarios. In addition to this, term plans offer a number of other advantages.
What advantages does term insurance offer?
The advantages of having term insurance coverage are as follows:
- Large amount assured at a low premium
A straightforward type of life insurance is a term insurance policy. The low price of term insurance is one of its main advantages. The fact that the rate for term insurance will be lower the earlier you purchase it is another significant benefit. You can calculate the approximate premium costs using a term insurance calculator.
- Simple to comprehend
You can find it challenging to comprehend the insurance-specific words pertaining to numerous life insurance policies while purchasing a life cover. Term plans‘ ease of understanding is one of their key advantages.
- Various options for death benefit payout
You can repay the EMIs on a personal loan you have taken out, a new automobile, or your new home. Your family members can be responsible for your financial obligations while you are away. It is here that the various term insurance policy payment possibilities are quite important. In the unfortunate event of your passing, your dependents may receive a lump sum payout that will assist them in managing the aforementioned financial obligations. Some term insurance plans also provide you with the choice of receiving a monthly payment in addition to the lump sum death benefit.
- Additional riders to strengthen the policy
There are riders available for term insurance plans, which you can select to increase the benefits of the standard coverage. By adding these riders, you can expand your term insurance policy for a small additional fee.
For instance, you may be entitled to a waiver of all future premiums in the event of dismemberment and in the event that one of the listed serious illnesses is diagnosed in you. This implies that even if you are unable to pay your policy’s premiums, your life insurance coverage will still be in effect.
- Benefits from income tax
Plans for term insurance also offer term insurance tax benefits. While the cost of a term insurance policy is tax deductible, the payouts are likewise exempt from taxes under the current tax code.
Benefits from Term Insurance Under Section 80C
The premium you pay to purchase a term insurance plan is exempt from tax under Section 80C of the Income Tax Act of 1961, up to a maximum of Rs. 1.5 lakh per year. By purchasing the plan with the maximum coverage available to you based on your age and health, you can take advantage of the section’s term insurance tax benefits to the fullest extent possible.
Insurance benefits for terms based on Section 10 (10D)
According to the guidelines of Section 10(10D) of the Income Tax Act of 1961, the death benefit of term insurance plans is completely exempt.
The tax benefits mentioned in the article may not apply if you opt for the new tax regime since many tax exemptions and deductions have been scrapped within the new regime.
- Coverage for critical illness
Critical illnesses can strike at any stage of life, and the cost of the necessary care may wipe out all of your money. Although the core advantages of term insurance only cover life, you can choose to add add-ons or riders to your policy to cover critical illness. If you are diagnosed with one of the severe illnesses covered by the insurance, you will get a lump payment under the Critical Illness Cover.
- Accidental death benefit coverage
In case of an accident resulting in dismemberment or passing away, the term insurance protects your family’s financial future. To give additional term insurance benefits or coverage in the event of an accident resulting in passing away or dismemberment, you can add this rider to your term insurance policy. * Standard T&C Apply
- Return of premium option
If the life insured passes away suddenly, a pure-term insurance plan solely offers life coverage to the beneficiary. It offers no advantages in terms of maturity. However, if you choose the return of premium option in your term insurance plan, you can receive a maturity benefit. If you choose this option, you will have to pay higher premiums, but if you live through the policy’s term, you will receive a refund of your whole premium payment.
These days, you may quickly estimate the premium for a term insurance plan with or without maturity benefits using an online term insurance calculator. Based on your financial requirements, it will assist you in reaching a wise conclusion.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.