Advantages Of Term Plans You Cannot Ignore
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As term plans do not offer any financial benefits like payment of sum assured or bonus etc. on maturity, the premiums are cheap for the term plans. During the term of the policy, if something happens to you, your nominee is paid the full sum assured. Not only this, there are also various term insurance tax benefits. Securing the financial future of our family is the most important goal of our lives and there is no other insurance plan which can match the benefits that term plans offer.
Top Benefits Of Term Insurance
Here are the top 7 term insurance benefits:
Lowest premium
This is one of the main benefits of term insurance. Term Plans let you have the highest life cover in lieu of a low premium. This is possible as being a pure life protection plan; no ancillary benefits are attached to it. If you compare the premiums of traditional life insurance plans with that of term plans, you will find the premiums cheapest for the term plans.
Lower tenure
You can take a term Plan for shorter tenure also. For example - You have taken a Rs 50 Lakhs home loan for 15 years. You can protect that loan by taking a term plan of equivalent amount for 15 years only. This ensures that during the loan period if something happens to you, your family is able to retain the home by paying the balance loan amount.
Lower premium if you start early
You should take a term plan early at the start of your career as the term plan premiums depend on your age. If the age is lower and the policy term is high, the premium will be the lowest.
Longer plan tenure
Generally, term plans can be taken up to age 70, but some companies allow the life cover up to 80 years of age. With the growing life expectancy rate in India, you should consider taking a life cover up to a maximum age of 80 years.
Fixed premium during the tenure
Once your term plan is accepted against a certain premium, the insurance company will not revise or change the premium during the policy tenure. This gives you certainty as the life cover continues at the same cost even though you are ageing.
Policy continuation
This term plan benefit is often underrated but is highly valuable. In case you are unable to pay your premiums due to financial difficulties, the term plan does not stop but becomes 'Reduced Paid-Up', if you have paid premiums for at least up to 3 years. Once your policy is under 'Reduced Paid-Up', your sum assured, the sum assured on death and maturity sum assured shall be reduced in proportion to the premiums you have actually paid against the total premiums that were payable during the premium paying term. Therefore, the nominee will get the reduced sum assured in case of death of the life insured.
Income Tax Benefits
Out of all the benefits of term insurance, there are mainly two term insurance tax benefits-one is in the form of a deduction and the other is a complete tax exemption. You can avail a tax deduction on the premiums paid for term insurance plans up to Rs 150,000 per annum under Section 80C of the Income Tax Act 1961. The maturity benefits paid (in case of term plans with return of premium and also in case of the death benefit paid to your nominee) are also tax-free under Section 10 (10D) of the Income Tax Act 1961 subject to conditions mentioned therein.
Conclusion
As we age and progress in our respective careers, our responsibilities also keep increasing. The utmost important things in life are protecting the family from unforeseen circumstances by providing them with financial security. The premium you pay is a very small price compared to the benefits attached to a Life Insurance Term Plan. A term plan does that and thus you buy peace of mind.
Also read: Does Term Insurance Cover Disability
