Top Advantages of Having a Term Insurance Plan
With numerous life insurance protection plans available to choose from, term insurance—which is perhaps the most important one—is often neglected. A term insurance plan is the least expensive form of life cover that can provide your family with security benefits for a defined period
Why Do You Need a Term Insurance?
As American Businessman Dave Ramsey aptly said, “Term life insurance is part of a good defensive game plan.” It is an excellent way to ensure your dependents are protected in case of your untimely death. The insured sum is paid to the selected beneficiary, which would likely be a family member. Thus, your loved ones can receive a decent amount that would help them take care of your liabilities and responsibilities.
While you can select the “insured” amount depending on your needs, experts recommend deciding on an amount that you feel will be enough for your immediate dependents to survive in your absence. You can choose from multiple premium payment options such as regular payment option, limited payment option, or single payment options.
Wondering whether you should opt for term insurance? Read on to understand some of the key features of a term plan.
- Benefit on Death
A term plan acts as a pillar for when you are no longer around to provide monetary support to your family. This is critical in case you are the sole breadwinner of your family. Having term insurance will ensure financial security for your loved ones in case of your untimely death.
You can choose to discontinue the term policy, albeit this would mean a loss for you as you are not entitled to receive any money while you are alive. On the bright side, though, if your purchasing power increases, you can opt to enhance the life cover by 25% or 50%, which is useful when the number of dependents increases (e.g., during your marriage or when you have children).
- Low Premiums
Term insurance plans have the lowest premiums; this, however, depends on your age, term plan opted, as well as specific medical criteria. With a few thousand rupees a month, you can avail a cover of a crore rupees. Thus, the affordability of this plan helps you choose a large life cover without being burdened.
- Tax Exemption
The premium you pay for the term plan is exempt under section 80C of the Income Tax Act, up to a total limit of INR 1,50,000. The maturity proceeds received are also considered tax-free income.
- Easy to Understand
These plans are not very complicated and can be understood even by amateurs—upon paying the premium amount; you are protected by the plan for a defined period.
With the numerous advantages offered at a low price, a term plan does not affect your other investments. So, go ahead, and enjoy the financial stability that a term plan offers, and secure the future of your family.