Term insurance plans set the foundation of a strong investment portfolio. It is because such a plan will become an income replacement tool for the family of a deceased policyholder.
Securing the monetary future of your family should be your first objective of investment planning. Therefore, apart from investing in financial instruments, you need to buy term insurance plans. If you are wondering about the term insurance meaning and how it can be beneficial, then read on.
Term insurance is a type of life insurance policy that secures the life of the policyholder againstuncertainties. If the insured dies within the tenure of the term plan, his or her family receives the death benefit that can help them cope with all the expenses. As term insurance offers a high sum assured, you can have peace of mind that your family can maintain their lifestyle and live a financially independent life. Here are some advantages of investing in a term plan.
- Pocket-friendly premium
A term plan comes at an affordable premium. There is no other life insurance product in the market today that offers such a cost-effective premium at a high sum assured. If you invest in it at an early age, you can get a more economical premium. It is because the rate of mortality is considerably low at a younger age. Moreover, there are lesser chances of you getting life-threatening diseases, like high blood pressure, diabetes, and cardiovascular diseases. So, insurers perceive you as a low-risk policyholder.Moreover, the premium remains fixed throughout the tenure of your term plan. So, invest early to get a policy at a reasonable cost.
- Tax benefits
You can reap term insurance tax benefit under various sections of the Income Tax Act, 1961. As per Section 80C, you can seek a deduction for the premium that you pay towards your term plan. Here, the maximum permissible limit is INR 1.5 lakh per annum. According toSection 10 (10D), the death benefit received by your nominee is tax-free. Besides this, you can claim deductions under Section 80D for the premium that you pay for a health-related rider, like critical illness. The term insurance tax benefits can help you save a significant sum over the years, especiallyif you have invested in it at a young age.
- Life cover for a long duration
With a term plan, you can have life insurance until the age of 99.
- High sum assured
In case anything untoward happens with you, your family will receive the sum assured. A term plan offers a substantial sum assured. So, you can provide for your loved ones even if you are no longer around. Here, your family members can receive the death benefit in the form of a one-time lump sum or at regular intervals, as decided by you while applying for the policy.
- Accidental death benefit
It is a rider that you can purchase at an additional cost. This rider widens the scope of your policy and provides death benefits if an untoward incident occurs due to an accident during the policy duration.
- Critical illness cover
It is another rider that can come in handy. Stressful life, improper eating habits, smoking, and the consumption of alcohol can lead to any critical illness. With this rider added to your term plan, you can get a lump-sum if you are diagnosed with a critical ailment. Do check the list of illnesses that your insurer covers under this rider.
- Terminal illness rider
This rider makes you eligible for a lump sum payoutif you are diagnosed with any terminal illness like last-stage cancer or AIDS.
While investing in a term plan, ensure that you opt for a large sum assured, as the cost of living is increasing day-by-day. You can seek the help of a term insurance plan calculator to search for an ideal policy that suits your requirements.
