Term life insurance is the simplest form of insurance that offers financial coverage against a fixed premium for a designated period of time. The primary benefit of the term life insurance includes financial protection for your family and loved ones in case something happens to you. The coverage amount under the policy gets paid out as the death benefit to the beneficiaries as a lump-sum payout, monthly or partial payouts.

Term life insurance is the most affordable life insurance policy which ensures complete protection and financial stability of the dependants, after the policyholder’s demise. It ensures that the dependents of the policyholder enjoy the same standard of living as before.

Good things about Term Life Insurance

Looking at the uncertainties of life, the term policies are becoming more and more important in today’s scenario. There are several good things about term insurance which makes it inevitable for any individual. So, here are some positive features of the term policies that you should keep in mind:

Low Premium: Life Term Insurance rates or the premiums for term life insurance policy are much lower than the other insurance products. This refers to the term insurance policy as an affordable way of providing complete financial protection for your family.

Financial Security: An untimely death is an unfortunate situation and so are the financial liabilities that suddenly descend on your family. A term life insurance plan can be your plan-B in such situation, ensuring your family is financially protected in your absence.

Low Claim Rejections: As long as you have disclosed all the facts about your health, finances, and habits correctly, there are very low chances of claim rejection. In fact, according to IRDAI, no insurer can claim non-disclosure of facts, after a policy has been in effect for two years.

No Brokerage: Typically, there are no brokerage charges applicable on a term life insurance plan bought online. You can save up to 5-6 percent of your money, which is generally allocated for brokerage charges when a policy is bought offline.

Why buying Term Life Insurance is a must?

There are several benefits of buying term life insurance, some of which have been listed below:

Larger life cover at low premiums: Term life insurance offers high life cover at considerably low premiums. Due to the fact that the term insurance does not involve any investment aspect. And this is the reason, you will notice quite a significant difference in the premium rates of term insurance plans and other life insurance policy products like endowment or money back plans. Hence, investing in a product like term life insurance helps you to save as well along with financial security.

Death Benefits: In the case of the untimely demise of the policyholder during the tenure of the term life insurance, the beneficiary receives the total death benefit. This is the primary coverage provided by the term life insurance. The death benefit amount is paid in various payout modes such as a lump-sum amount, monthly payout or partial payouts. Depending on the individual needs, the dependents can use the lump-sum death benefit amount to take care of any immediate financial liabilities and needs, like loans, while the monthly pay-outs can be used as an income to help sustain the family’s lifestyle and day to day needs.
Tax Benefits: The premiums that you pay for your term life insurance policy are tax-free under Section 80 (C) of the Income Tax Act. You can claim benefits for an amount of up to Rs 1,50,000. Also, in most cases, the payout received as the death benefit is not taxable.

Rider Benefits: Riders are an important addition to a basic term life insurance policy as they offer you the option to customise and enhance the coverage. Some of the most popular riders in the term life insurance are:
Accidental Death Benefit Rider: This rider offers an additional sum assured over the base coverage, in case of the untimely death of the policyholder due to an accident.

Accidental Disability Rider: This offers an immediate lump-sum payment in case the policyholder suffers from a disability, caused by an accident during the policy term.

Critical Illness Rider: This rider covers several critical illnesses. In case the insured is diagnosed with one of the listed illnesses during the policy term, the critical illness rider offers benefits in terms of an additional sum assured over the base coverage.

Waiver of Premium Rider: This is an enhancement that ensures that any remaining premiums of the term insurance policy are waived off in case the policyholder suffers from a permanent disability or is diagnosed with one of the covered critical illnesses during the policy term.

Option to Increase Death benefit: Certain term insurance policy providers offer you the option to increase the life cover at the key stages of life like marriage, birth of a child, etc. For instance, 50 percent you can increase during marriage and 25 percent at the time you become a parent. In such scenarios you can opt for an enhanced sum assured depending on your requirement.

Option for Decreasing Term Life Insurance: Many providers also offer the option to buy such a term plan, wherein the sum assured keeps decreasing every year. In this way, as your financial obligations decrease with every passing year, your requirement for a huge sum assured also decreases. You can opt for a lower sum assured, which will also mean a lower premium.

Apart from being a good option to safeguard your family’s future in your absence, term life insurance is also an important part of your financial planning. Therefore, it is advised to choose the right term insurance plan, based on your needs and requirement. Such that you don’t have to regret at the later stage and enjoy complete peace of mind.

Source: https://bimakaro.in/ik/term-life-insurance/all-you-need-to-know-about-term-life-insurance-246