How a Good Term Life Insurance Sets You Free?

Life can be uncertain. And, as a breadwinner of the family, you would want to ensure that your beloved family member’s future is financially secured even when you are not around. Sometimes, even the years of savings may not be enough for the family to meet all their needs, especially if you have any dues like a home loan or other debts.This is where a term insurance policy plays an important role in giving your family a financial security they deserve. In the event of your untimely demise, the benefits received from the policy can help the family deal with the financial losses.

Term insurance is a type of life insurance policy that offers coverage against the uncertainties of life for a specific period. Under a term life insurance policy, you can choose a specific tenure and sum assured. In the event of your unfortunate demise during the policy period, the insurance company pays the sum assured, which is called death benefit to the nominee. The amount is usually paid in lump sum.One of the significant highlights of a term policy is that it is the cheapest form of life insurance and it has the most affordable premium. You can buy a policy with a large sum assured at an affordable price. A good term life insurance offers much more than a large sum to your dependent family members.Let us look at some of the amazing benefits of a term plan and how it gives you a sense of freedom.

• Gives you adequate coverage A good term life insurance policy is that one that does not provide protection only from untimely death but also offers coverage against critical diseases like cancer, and accidental casualties. Typically, the term insurance policy offers a high coverage, which can help your family meet their expenses without disturbing their savings.
• It is affordable A term insurance policy offers adequate financial protection at an affordable price. This is because the premium for a term plan is lower than any other type of life insurance.

Suppose you are 30 years old and a smoker. Your annual income is Rs. 10 lakhs. With such high income, you can get a term insurance cover up to Rs. 1 crore with an annual premium of Rs. 10,000, which comes to about Rs. 834 per month.

• Provides monthly income to the family members Typically, the term insurance plans provide a lump sum payment to the family members post the demise of the policyholder. And, often the family members find it challenging to manage a large sum. To mitigate this challenge, certain insurance companies give the policy buyers to choose between a lump sum and monthly payment options. You can also choose a third option where you can opt for a 50% lump sum payment and the remaining amount in smaller instalments as monthly income.Thus, a good term life insurance gives you the flexibility to make provisions for monthly income to the dependent family members in your absence.
• Tax benefits Apart from securing your family members’ financial future, term insurance also allows you to save a significant amount on your tax.The premium you pay for the term insurance is eligible for tax benefit under Section 80C of the Indian Income Tax Act. The maximum tax benefit you can get is capped at Rs. 1.5 lakhs in a financial year. Additionally, the payment received from a life insurance policy on maturity or death is exempted from tax under Section10 (10D).
• Return of premium option Unlike a ulip (Unit-Linked Insurance Plan) or an endowment plan , the term insurance policy does not provide a survival benefit or returns on investment. However, if you opt for a return of premium option. Under this option, the insurer will pay back the premium you have paid if you survive the policy period. But, remember, if you opt for this option, your premium will increase.

Also Read: All About ULIP - Unit Linked Insurance Plans

Thus, a term insurance policy gives you several benefits. And, by securing your family’s financial future, you can breathe a sigh of relief.

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.