Things to know before buying a Term Life Insurance
Term Life Insurance is a pure life insurance product which helps secure your family’s monetary needs, in case of any eventuality. It offers complete financial coverage against the premiums you pay for a specific period of time.
This coverage amount is given to the beneficiaries of the policy in case of policyholder’s demise. Having a term life insurance in today’s time has become inevitable; however, choosing the right one is more critical. So, here are some crucial pointers to keep in mind while buying a term life insurance plan.
- Choosing the right policy cover: When you invest in a term insurance plan, the selected sum assured should be based on the parameters like your current and future financial responsibilities, inflation, and the financial liabilities you have at the moment, to name a few.
- Policy Period: Investing in a term insurance plan at a young age is an ideal proposition as you get a higher cover at a lower premium amount. You can also opt for term insurance in the later years, but the premium will become expensive in such a case. There are different term insurance plans for different phases, i.e. young age, middle-age, and retirement.
- Different Payout options available: When it comes to term life insurance, you can go for a lump-sum payout or choose a life cover with the possibility of monthly or partial payout. This caters to different preferences and life needs. The premium, too, will vary based on the payout option you choose.
Advantages of Term Life Insurance
- Life Insurance with a clear focus: Term life insurance is very simple to understand when compared to other insurance plans. Here, all you have to do is decide the coverage amount, duration of the policy, and then choose the insurance provider. With the availability of many insurance providers, you can easily get term life insurance at the best prices. The ‘one thing’ that you must understand here is that a term life insurance is a pure life cover, which means that you won’t receive any maturity amount at the end of the policy term.
- Flexible: One of the best benefits that you will get if you buy term life insurance is flexibility. These insurance policies are available in various timeframes. You can get a cover which can last for a year or so with an option for the annual renewal of the policy or go for a lock-in period of five years which can cover short-term debts. Term insurances are also available for longer periods such as 10-15, 20-30 years. That way, term life insurance gives you the flexibility to select the policy according to your needs.
- Tax Benefits: Another benefit of term insurance is the tax benefit. Although, it is said that tax saving is a driving factor behind the purchase of a term policy; however, it is to be noted that both the premium and the payout comes with tax benefits and exemptions that are at par with the prevailing tax laws. Under Section 80C of the Income Tax Act, you get exemption of up to Rs. 1.5 lakh per annum on the term insurance premium, depending on the fulfilment of specific terms and conditions. This is applicable in cases where you are paying a premium for your children and/or spouse.
- Low Premium Rates: One of the significant benefits of buying term life insurance is its rates. Term plans offer high life coverage for a predefined period at considerable low premiums than the other life insurance policies. You can easily calculate your premium, total coverage based on your income, age and other aspects through an online premium calculator and select the one that best suits your requirement. With some of the best term life insurance policies available at the lowest rates, it is gradually becoming an insurance product of everyone’s choice.
- Term life insurance is not meant for saving purposes for needs like education of your child, marriage, pension, and so on. Along with this, there is no provision for wealth creation through term insurance policies.
- Though the premium rates for term life insurance are low, there are chances that it might increase with the increase in age.
- A term insurance policy doesn’t allow or offer income and capital needs for your family while you are alive. Adding to this, there are no surrender values or loans available under term insurance policies.
When Should You Buy It?
Term life insurance can be bought in the following life situations: –
- In case, you have a tight or limited budget, instead of going for a cash value life insurance, you can opt for term life insurance as they have much lower rates.
- In case, you have a low income, but in need of a more extensive cover to safeguard your family’s future in your absence, a term insurance policy is the most reasonable option for you.
Term life insurance is one of the best ways nowadays to secure your family’s financial future after your death. They are easy to avail, simple to understand, and comes at really affordable prices. Now with digitalization taking over the world, you also have the flexibility to purchase term life insurance online and lead a tension-free life. If you are looking for term plans online, then visit BimaKaro.in which offers a variety of term life insurance at affordable rates. Go through the term insurances, compare the prices and the buy the most suitable one for yourself.