Why You Must Buy a Term Insurance Plan? How Is It Beneficial?

Insurance plan

As long as we are living a healthy life, the majority of us stay positive and look forward to a promising future lying ahead. We make many plans and put effort to make our dreams come true. Despite so much positivity and efforts that we make, many of us may not make it for long and pass away too soon. Well, this is why it is said that life is uncertain for one and all. And if you want to settle the future of your family amidst such uncertainties, you must start putting your money into investments that offer a high return to your family, even in your absence. One such investment plan is term insurance. Now let us first understand the concept of term insurance.

What is Term Insurance?

Term insurance is a pure form of life insurance policy that provides coverage to the policyholders for a certain period. In a situation of the demise of the policyholder during the tenure of the policy, the beneficiary of the term plan gets the death benefit.

As compared to permanent life insurance, term insurance is less expensive. Term insurance comes with no cash value, unlike many permanent insurance options. To put in other words, the only value that one can get out of this kind of policy is the death benefit.

Now if you are wondering about why you should buy term insurance, here are some points for you:

Low Premium: Once you buy a term life insurance plan, you have to pay a nominal premium, which you can do yearly as well, and your family can get the highest death benefit on your demise. The rates of premium are lower than many other insurance plans. Term life insurance only provides a life protection plan, and there are absolutely no ancillary benefits attached to it.

Even better if started early: The amount you pay as a premium depends totally on your age and even the policy term. The earlier you purchase a term plan, the lower the premium rates you will have to pay.

Lower tenure: You can go for a term insurance plan for the lowest tenure of 10 years. You can opt for shorter-term plans, especially if you have already taken a personal or home loan. For instance, if the tenure of a home loan is 10 years, you should take a term plan of 10 years tenure. This will help in a situation when the policyholder dies in that term period, the family can retain the home by paying off the balance loan amount.

Longer-term life cover: You can take a term plan for a longer period. Some companies enable the policyholders to take term plans up to the age of 75 years. 

Increasing life cover term plans: Some term plans provide increasing life cover at pre-approved intervals, and the percentage that increases is pre-defined. This enables the policyholder to increase the life cover in a cycle as the income of the policyholder increases.

Fixed premium: The premium that is decided at the time of buying a term insurance policy, remains the same throughout the tenure. Therefore, you do not need to worry about any increase in the premium amount in the future.

Option for riders: Certain term insurance plans enable the policyholders to add riders such as critical illness rider, accidental death cover, or specific disease riders such as cardiac cover, etc. To add a rider, you need to pay a nominal premium and get maximum benefits out of it.

Income tax benefits: Depending upon the amount of premium you are paying, you can avail of a tax benefit of up to INR 1,50,000 per annum. This comes under Section 80C of the Income Tax Act 1961. Under Section 10 (10D) of the income Tax Act 1961, the death benefit availed of by the beneficiary is tax-free.

Easy buying options: Purchasing a term insurance plan is perhaps one of the easiest things you can do. The only effort that you need to put in is to compare the term insurance plans online and choose a plan that suits the needs of your family. 

Now if you want to find the term insurance plans to compare, you can visit the website of IIFL. You can also get related information regarding term life insurance plans.

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