What Is Term Insurance?
Term insurance is a kind of life insurance that covers the policyholder for a certain amount of time. If the insured person dies within the time frame, the nominee gets the coverage amount, which is the sum insured. On the other hand, if the insured person lives past the term, the policy doesn’t cover anyone, not even the nominee or policyholder, unless it’s a return of premium term plan.
You can buy affordable term insurance online to protect the financial future of your family. One of the most affordable types of life insurance is a term plan. With this kind of life insurance, your family would be able to keep living the same way they do now, and they could even use the sum assured amount to pay off any debts you already have. Term insurance is a kind of life insurance that covers the policyholder for a certain amount of time. If the insured person dies within the time frame, the nominee gets the coverage amount, which is the sum insured. On the other hand, if the insured person lives past the term, the policy doesn’t cover anyone, not even the nominee or policyholder, unless it’s a return of premium term plan.
You can buy affordable term insurance online to protect the financial future of your family. One of the most affordable types of life insurance is a term plan. With this kind of life insurance, your family would be able to keep living the same way they do now, and they could even use the sum assured amount to pay off any debts you already have.
How does Term Insurance Work?
It’s easy to understand how term insurance works.
- You buy a term insurance policy with a certain amount of coverage and length of time to protect the financial future of your family.
- If you die during the time your policy is in effect, the insurance company will pay your family a lump sum amount.
- To use the life insurance, you must pay the premiums on time.
- If you don’t die during the policy’s term, neither you nor your nominee will get the sum assured.
- You can buy different term insurance add-ons to make your coverage better.
Why Should You Buy Term Insurance?
Disease, disability, and death are all bad things that we can’t ignore. As a financial tool, term insurance can help you save the financial future of your family by giving you the coverage you need. Here are some examples of people who should buy term insurance.
Parents: Raising children is always a big responsibility for parents. As a parent, you would want to make sure your child has a good future, give him or her the best education, save money for their wedding, etc. With a term plan, you can be sure that if something happens to you, your child will be taken care of financially.
Even though young professionals have less family responsibilities, few of them are the only source of income for their families and have debts like car loans, personal loans, etc. to pay off. With term insurance, if the insured dies during the plan’s term, the family can pay off the insured’s loans and other debts. Also, term insurance has a low premium compared to any other kind of life insurance.
Couples who just got married: With term insurance, married people can make sure that their partner will be taken care of financially if something bad happens. It is one of the best kinds of life insurance for young couples who want to make sure they have money for the future.
Working women: Many young women today are the main source of income for their families. With a term plan, these women can make sure that their parents, spouse, and children will be taken care of in the future.
Taxpayers: Term insurance is a great way to save money on taxes. The premium paid is tax-deductible under section 80C of the Income Tax Act of 1961, and the death benefit paid to the nominee is also tax-deductible under section 10. (10D)
Retirees: Having a term insurance plan in retirement gives your spouse financial security because he or she can keep living the same way without having to cut back on needs.
Reasons To Invest in Term Insurance
Term insurance plans are the most basic type of life insurance. They are very affordable and can help a person protect their loved ones’ financial future. Some reasons why you should buy a term insurance policy are listed below:
Premiums that aren’t too expensive: Because a term insurance policy only covers a certain amount of time, the premiums aren’t too expensive. A person can get a lot of coverage for a small amount of money. Also, it’s best to buy a term insurance policy when you’re young because older people are more likely to get sick and need more coverage, which drives up the cost of the premium.
Helps You Save on Taxes: One of the best reasons to buy term insurance is that it can help you save on taxes. Under Section 80C of the Income Tax Act, people who pay premiums for term insurance can get tax breaks of up to Rs. 1.5 Lakh. Section 10(10D) of the Income Tax Act says that there are no taxes on death or the end of a term insurance policy.
Option to Add Riders: With a term insurance policy, you can add what are called “riders,” which are extra coverages that help make the policy cover more. In exchange for more premium, the riders can be added to the term insurance policy. Accidental Death Benefit, Accidental Total and Permanent Disability, Critical Illness Rider, Waiver of Premium Rider, etc. are all common types of life insurance riders that people choose.
Provides Financial Security: A term insurance policy is sometimes called a “pure protection plan” because it helps the family of the life assured have financial security in case the life assured dies unexpectedly during the coverage period. If the life assured dies too soon, the death benefit will be given to the nominee. This can help the life assured’s family meet their financial needs if the life assured is no longer around.
Eligibility Criteria To Buy Term Insurance Plan
Term insurance is a great way to invest because it gives you protection for life in exchange for regular premium payments. Term insurance policy is a type of pure risk protection plan, but before you buy one, you need to check the eligibility criteria to see if you meet them. Here are the requirements to be able to buy a term life insurance policy:
|Minimum Entry Age||18 years|
|Maximum Entry Age||65 years|
|Minimum Policy Tenure||5 years (may vary from one insurance provide to another)|
|Maximum Policy Tenure||No limit (may vary from one insurance provide to another)|
|Who can Purchase It?||Salaried people, young people, newly married people, new parents, parents or senior citizens|
|Available for NRIs||Yes, term insurance plan is available for NRIs|
|Death Benefit Payout Options||
|Term Insurance Riders||
|Documents Required to Purchase It?||
|Medical Tests||While purchasing a term insurance policy it is important to undergo a medical test as it helps the insurance provider to assess the risk and determine premium.|