Wondering if you need a life insurance term plan in your life? The answer is yes. You know why? Because life is unpredictable, and a lot of things can go wrong if you don’t prepare for such contingencies. But there is much more to this investment product than just basic financial security.
Other than being the ultimate financial cover to secure your family’s finances in your absence, it is also a perfect product to add to your investment portfolio because of its tax benefits. From saving you money in tax deductions to the tax-free death benefit, this term insurance plan offers a lot more than economic security.
Income Tax Benefits
The tax benefits of term insurance are one of the leading reasons why people invest in these plans.
Here are some of the benefits that you would be able to enjoy when you invest in term insurance.
- Benefits under Section 80C: As per section 80C of the Income Tax Act 1961, the premium paid to buy the life insurance term plan is eligible for deductions up to a limit of Rs. 1.5 lakh per annum.
- Benefits Under Section 10(10D): The death benefit of term insurance plan is also exempt from taxes.
If you want to invest in a life insurance term plan, then here are some more reasons to help you make a well-informed decision.
- High sum assured at a low premium
A term insurance plan is a pure and simple insurance product that uses the premium to provide life cover. What makes this financial product so desirable for first-time investors is its affordable premium that you can easily manage with your monthly bills. Another benefit of term insurance is that the sooner you buy, the lower your premium will be.
Additionally, you can save more money on your life insurance term plan if you buy it online. You can use online tools to compare the policy benefits and associated costs to choose the right plan.
- Easy to Understand
The one thing that makes potential investors hesitant in buying insurance plans is their complex terms and features. However, term insurance plan is relatively easy to understand as it does not have an investment component. The premium you pay will help the insurer cover your life for a fixed duration to give you term insurance benefits.
- Flexible payout options
In case something happens to you, the burden of financial responsibilities, such as EMIs, will fall on your family members. This is why you must choose the payout option carefully. With a term plan, you can choose to give your dependents a lump sum amount as a death benefit or receive monthly income along with lumpsum to manage their expenses with ease.
- Rider benefits to expand the policy coverage
Life insurance term plan can be supplemented with rider options to enhance its cover and also customize the policy. It is easy to add these riders to your plan by paying an additional premium. You can choose from multiple options such as critical illness rider or disability waiver etc. Read the benefits of each of these rider options and select the ones that are most suitable to your lifestyle.
- Critical Illness Cover: Critical illness is a reality in today’s day and age when lives are stressful, and the lifestyle is unhealthy. When diagnosed with a severe health condition, you may end up using your entire savings to pay for the treatment if you do not have add-ons or rider benefits on your insurance cover.
When you add this option to your insurance cover, you get a lump sum amount in case you get diagnosed with the critical illness covered in this policy. This way, you will be able to pay for your treatment and other expenditures without digging into your savings.
- Accidental Death Benefit: Accidents can lead to death or dismemberment. By taking an accidental death benefit rider, you/nominee become eligible for a lump sum benefit amount in case of death or dismemberment caused due to an accident. The sum assured is payable to your loved ones as per the chosen payout method.
- Return of Premium: A pure life insurance term plan provides life cover to the policy beneficiary in case of your untimely demise. However, there is no benefit attached to maturity.
But if you want to earn back your investment in case you outlive the term, then you can opt for Return of Premium rider where you become entitled to get back all the premium paid throughout the policy duration.
Term insurance plan has gained prominence amongst policyholders due to its numerous benefits. If you are investing in an insurance plan for the first time, then a life insurance term plan is your best bet for not just its financial security cover but also its many tax-saving benefits.