When it comes to securing your family’s financial future, term insurance is the simplest yet most powerful tool. More so in a country like India, where family bonds tend to overshadow everything else, understanding the benefits of term insurance can really put you in good stead. In this write-up, we will consider six major term life insurance benefits that everyone should consider.
Affordable Premiums
One of the prime reasons term insurance is so attractive is the low premium it offers. It provides massive coverage at a low premium cost, particularly compared to other life insurance products like whole life or endowment plans. This makes it an ideal choice for first-time young professionals and people who want comprehensive coverage without bearing too much financial load.
The premiums are very affordable only because the plan itself is simple: it just offers a death benefit and doesn’t accrue any cash value over time. Simplicity is transferred to the costs being held down for the policyholder.
Simplicity
Term insurance is kept very simple in nature, and there are no frills attached to it. There isn’t any hidden clause, or even there is no other component for investment. One has to pay a premium to keep the policy in force, and should you die during the policy term, then the sum assured will be given to the beneficiaries. This simplicity ensures that while choosing a term plan, you won’t be bogged down by complexities, and hence, you can make an informed decision with much ease.
High Sum Assured
The most important advantage of term insurance is that it is possible to opt for a high sum assured, securing the financial future of the dependents at a low cost. This is most important in a country like India, where family responsibilities are most important, and the loss of even one earning member pushes the family into a great financial burden.
Term insurance ensures the only way you can ensure that your family’s future expenses right from the education of your children to their marriage and day-to-day expenses, are well taken care of.
Tax Benefits of Term Insurance
Term insurance not only provides a very effective way to secure your family’s financial future but also brings along certain attractive benefits in the form of taxes. The premium paid under a term insurance policy is tax-exempt to the extent of ₹1.5 lakhs under Section 80C of the Income Tax Act. In addition, Section 10(10D) provides that the amount of death benefit, on the other hand, is completely exempt from taxes. With such perks for tax benefits, term insurance emerges as an even better investment.
Flexibility to Choose Policy Term
Most importantly, it gives the flexibility of the policy term till your retirement age or children’s financial independence age. Hence, the term to be decided can be chosen as per the life stage and best fitting into the financial goals. Be it a 10-year horizon plan or a 30-year horizon, you can relate it to your major financial obligations. This flexibility helps ensure you are not over-insured or under-insured.
Add-on Riders for Extended Protection
Term insurance policies have a rider attached to the policy, which is an additional benefit that can be opted for on payment of extra premium—such as the critical illness rider, accidental death benefit rider, and waiver of premium rider. These riders add to your insurance premiums and bring in benefits that only cater to particular situations. Overall, it provides a complete safety net.
Also Read: What to Check Before Paying Your First Term Insurance Premium
These are some of the benefits of term insurance that makes it a viable option for almost every individual looking for insurance.
