Term insurance is a type of life insurance product that is offered by insurance providers. The key benefit of purchasing a term insurance policy is that policy buyers are offered a large cover for an affordable premium. This ensures that you, as a policy buyer, are able to provide adequate financial security to your dependents, even in the event of your untimely death. Read on to know more about why you should purchase a term insurance policy today.
1. Large Sum Assured: Insurance providers usually offer a high sum assured to policy buyers purchasing term insurance plans since these policies only provide protection benefits. Thus, this large life cover can help you safeguard your loved ones financially in case of an unfortunate eventuality. When opting for a sum assured, make sure to consider your financial needs, investments, liabilities and debts, and future financial goals, in order to ensure that you pick an adequate amount.
2. Affordable Pricing: Premiums for term insurance plans are lower than premiums for other life insurance products since term insurance plans do not acquire a cash value at any time during the policy tenure. However, you should keep in mind that the premium rates for term insurance plans are linked to your age at the time of purchasing the policy. Thus, the older you are when you purchase a term plan, the more you will have to shell out as premium. In order to keep policy premiums in check, make sure to purchase a term insurance plan at the earliest, with an adequate coverage and policy term.
3. Option to Purchase Riders: Individuals purchasing term insurance plans can also purchase riders that will provide additional benefits at a nominal cost. Some of the popular riders that you can purchase with your term insurance plan include the Critical Illness Rider, Waiver of Premium Rider, Accidental Death Benefit Rider, Accidental Death and Disability Benefit Rider, Income Benefit Rider, etc. While the types of riders that are offered by insurers will usually vary based on the plan type, there is no limit to the number of riders that you can purchase, in most cases. It is highly recommended that you customise your policy with riders since it will provide you an enhanced coverage, without having to go through the hassle of maintaining multiple term insurance plans.
4. Online Policy Purchase: Most insurance providers and third-party insurance websites offer a range of term insurance plans online. Thus, as a policy buyer, you can choose to purchase your policy through either online or offline channels. The benefit of purchasing a term insurance policy online is that you will save on premium costs since you won’t have to pay any additional brokerage or agent fees. Further, you can also purchase the policy from anywhere and at any time, after doing your due research.
5. Customisable Policy Tenure: When purchasing a term insurance plan, you can choose a policy tenure from 5 years to 30 years, in most cases. You can purchase a term life insurance policy with a policy tenure that meets your exact needs. Thus, if you are a 30-year old who is looking to purchase a policy that will provide you a cover up to your retirement, you can opt for a term insurance policy with a 30-year policy tenure. It is always advisable to purchase a term insurance plan with a long policy tenure since your premium rate will increase each time you renew your insurance plan.
6. Tax benefits: While the primary purpose of a term life plan is to provide financial security to the policyholder’s dependents in case of an untimely eventuality, term insurance plans also offer significant tax benefits to policy buyers. Thus, you can claim tax deductions under Section 80C of the Income Tax Act, 1961, for premiums paid to maintain your policy. Similarly, the death benefit amount that your nominee is entitled to receive in case of your untimely death is also eligible for tax rebates, as per Section 10(10D) of the Income Tax Act.
7. Provides a Sense of Security: Purchasing a term insurance plan can provide you a sense of security and peace of mind. The death benefit payout that your nominee is eligible to receive upon your timely death can be used by them to pay off debts, pay for immediate financial needs, and can also help them meet their long-term financial goals. Thus, if you have a number of liabilities such as loans and debts, it is all the more important for you to purchase a term insurance plan with a large life cover.
Term insurance plans are easy to understand and offer one of the most basic forms of coverage to policy buyers. It is important to remember that term insurance plans only provide protection benefits to policyholders. Thus, in case of the policyholder’s death, a death benefit will be paid out to the nominee. However, no payout is offered in the form of survival or maturity benefits to the policyholder at the completion of the policy tenure.
Before you purchase a term life policy, make sure to compare the various term insurance plans that are offered by different insurers, read through the features and benefits of each plan, compare premium quotes, and opt for a policy that provides you adequate coverage at the most competitive premium rate.
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