Top 5 Term Insurance Benefits

Life insurance plans constitute 75% of the insurance sector in India, making it one of this sector’s most used products. A term insurance plan is among the best life insurance plans for your family and loved ones.

Term insurance policies pay flexible death benefits based on the cover you opt for. The coverage can range from ₹10 Lakh to ₹5 crore and more. This assured sum is essential to strengthen your loved ones through the most challenging times when you are not there for them. 

On a high level, a term plan can ensure continuity in the living standards of family members and help them meet life goals without compromising due to financial crunch. In this article, let’s explore the top 5 benefits of term plans that you should know to plan your family’s financial future smartly. 

1. High Coverage & Financial Security For Family

The first and most significant term insurance benefit is its high coverage capability at surprisingly low premium rates. This affordability makes it an attractive choice for life insurance and lets you achieve substantial financial protection for your family without straining your budget. 

Age: 31

Covered till: 60 years

* These are indicative premiums and cover amounts for understanding purposes only. 

If you look closely, the cover amount to the premium paid is significantly high in term plans. 

Additionally, you’ll benefit from even lower premiums if you opt to buy term insurance at a younger age. Younger individuals typically face fewer health risks, leading to more cost-effective premiums. One of the key term insurance benefits is that it also offers flexibility, with some plans even allowing you to increase coverage at significant life milestones like marriage or childbirth.

2. Tax Deductions 

Term insurance plans in India secure your family while offering some handy tax benefits under the Income Tax Act, which can make a massive difference to your savings. 

Under Section 80C, you can claim a deduction of up to ₹1.5 lakhs on the premiums you pay each year if it is not more than 10% of the sum assured. There’s also Section 80D, which kicks in if your term insurance plan includes health benefit riders. In this case, you can save up to ₹25,000 on your taxes and ₹50,000 if you have paid premiums for your senior citizen parents.

The most significant is the deductions under Section 10(10D). This ensures that the payout your family receives during an untimely event of your demise is entirely tax-free. This provision lets your family benefit from the total sum without worrying about taxes at a stressful time. 

3. Debt Repayment

One of the most significant advantages of a term insurance policy is how it can ease the burden of debt repayment. This feature is essential if you have any debt, like personal, education, or home loans. 

If something happens to you, the payout from your plan can be used to clear your loans. This way, your family does not have to bear this financial burden. The debt repayment benefit of term insurance policies safeguards your family against financial stress and helps them maintain their standard of living. 

4. Additional Coverage

Term insurance is highly customisable with riders, like add-ons to your base policy. These riders enhance your term plan and give your family extra protection. Some critical riders that you can consider adding to your term insurance policy are: 

1. Accidental Death Benefit Rider: This rider ensures your beneficiary receives an additional sum over and above the base policy amount if the life assured dies due to an accident. 

2. Critical Illness Rider: This rider offers a lump sum if you’re diagnosed with a critical illness listed in your policy. It can help cover treatment costs, allowing you to focus on your recovery without financial stress.

3. Waiver Of Premium Rider: If you face either a permanent disability or a critical illness diagnosis, this rider waives off future premiums. It ensures your insurance protection continues without the burden of ongoing payments.

5. Limited Pay Options

Digital insurance is changing the way you access term life policies. Buying term insurance has become a breeze and flexible for your pocket. The limited pay options allow you to complete your premium payments within a predefined period instead of paying them throughout the policy term. This way, you can finish paying for your coverage in 5, 7, 10, or 15 years while saving up to 50% on premiums (varies from insurer to insurer).  

Key Takeaways

In the grand scheme of your financial planning, term insurance is an essential choice. Here’s a quick tip: the younger you are when you opt for term life insurance, the more benefits you reap. You can benefit from lower premiums, more extensive coverage options, and the peace of mind that comes with long-term security.

Furthermore, you can consider platforms like PhonePe for a seamless and hassle-free insurance purchase experience.