Term Insurance Benefits: 6 Benefits You Should Know

In today's time, a term insurance policy is necessary for all. A term policy, which is also commonly referred to as a pure protection policy, helps you secure your family's financial future in your absence. In the event of your demise before the policy term, the insurer pays the death benefit to the nominee as a lump sum amount. But, if you outlive the policy tenure, you don't get any money back.

• One of the most significant term insurance benefits is its simplicity. A term insurance policy focuses on providing the dependent family members the sum assured in the event of your untimely death. All you need to do is pay the premium on time.
• Today, many people prefer buying a life insurance plans over other life insurance plans, mainly because it has an affordable premium. You can buy a term plan with a premium as low as Rs. 500 per month. Additionally, if you purchase the policy online, you can get the policy at a much lower premium than buying through offline mediums.
• Tax-savings is an important aspect of financial planning. With a term insurance policy, you can enjoy a host of tax benefits . The premium you pay for the policy is eligible for tax benefits to a maximum limit of Rs. 1.5 lakhs per annum under section 80C of the Income Tax Act. Additionally, the death benefit that the nominee may receive is fully exempted from tax under Section10(10D).
• When you purchase a term insurance policy, you can buy add-ons or riders, which are additional coverage options that enhance the policy benefits. Based on your specific needs, you can purchase add-ons like critical illness cover or accidental death cover by paying an additional premium.
• It is known that term insurance does not provide any payout on the policy's maturity. But, if you opt for a return of premium option, the insurer will pay the full premium amount upon maturity. Remember, when you opt for this cover, your premium will be higher than the regular term plan.
• Just as it is important to have a life insurance policy, it is equally important to have the right coverage. With an endowment policy or the ULIP, the sum insured is usually 10% of the annual premium. So, for example, if you buy a plan with a yearly premium of Rs. 20,000, you will get a coverage of Rs. 200,000. With term insurance, you can purchase a policy worth Rs. 1 crore for an annual premium ranging from Rs. 10-17K. Thus, the coverage provided by a term plan is 60 times more than the endowment plan or ulip .

With so many benefits, it is important to have a term insurance policy in your portfolio. Also Read: What is Term Insurance? Meaning, Benefits & Its Working

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.