Benefits of term insurance that you should know
Several people still think that whole life insurance is a better product, but term life insurance is such a product whose importance can’t be ignored. It is a form of life insurance that people should opt to secure their loved ones during challenging times and consider including in their financial plans. Although the benefits of term insurance might not help everyone with all their needs, it can still be a helpful tool to handle a financial crisis when you aren’t there with your family member.
Term insurance is the simplest form of life insurance that offers financial security to the policyholder’s family in case of the untimely demise of him or her within the policy’s tenure. However, while purchasing term insurance, one must remember that it is a pure protection plan with no maturity benefits. Although there are plenty of other benefits of term insurance, making it an inevitable choice for every individual.
- High death benefit at low premiums:
One of the primary benefits of term insurance is high sum assured or death benefit amount against low premiums. However, term insurance is not necessarily the least expensive for renewing the policy after the entire policy tenure gets over. The term insurance policy’s premiums will be costlier during renewal compared to the premiums charged during the policy issued. This is because the policyholder’s age will not be the same when renewing the term insurance policy.
- Flexible pay-out options providing financial security to loved ones:
Term insurance offers various pay-out options such as annually, monthly or partially. This helps the insured person opt for a pay-out as per their convenience, keeping in mind the liabilities. For instance, if the beneficiary requires monthly income, then a monthly pay-out option is ideal to fulfil their daily needs.
- Ease of paying premiums periodically:
In term life insurance, one can pay the premiums at different frequencies like yearly, monthly, quarterly or half-yearly. Under single premium plans, one can pay the entire premium at one go and get rid of the hassle of missed payments and getting policy lapse. However, yearly premiums are less expensive than monthly premiums. It depends on the policyholder to choose the premium payment option based on his or her convenience.
- Tax benefit:
One of the most crucial term insurance benefits is that its premiums are eligible for tax benefit up to Rs 1.5 lakhs under Section 80C of the Income Tax Act (ITA), 1961. This benefit help policyholdersd in saving tax. Moreover, the death benefit amount that the policy nominee receives upon the insured person’s untimely demise is completely exempted from tax under Section 10(10D) of the Income Tax Act.
- Add-on benefits of term insurance as Riders:
Riders are the add-on benefits available with the term insurance at a nominal cost. These benefits help in expanding the spread of the coverage while providing financial assistance to the insured’s family members during an emergency. Some of the most popular riders are critical illness rider, accidental death benefit, income benefit rider, and waiver of premium rider, amongst others. For instance, if the policyholder is diagnosed with a critical ailment, then the critical illness rider offers a lum-psum pay-out that can help the insured person in his or her treatment, keeping his or her savings intact from draining out.
Needless to say, that term life insurance is a necessary inclusion in everyone’s life, probably because of the rise of uncertainties in one’s life. All these benefits of term insurance make it a definite choice to provide financial security to one’s loved ones in his or her absence. So, if you are still thinking about whether to buy term insurance or not, you can speak to the financial advisors of BimaKaro.in. They will help you clear out your confusion while suggesting the best term insurance plan based on your requirements and preferences. So, don’t wait; take your first step towards a secured future today with BimaKaro.in.