Understanding Term Life Insurance Plans
A few months ago, a term life insurance plan of an acquaintance matured after 20 years. No benefit was paid to him. He was pretty upset about it. The reason was that he had chosen a pure protection insurance plan which provides coverage against the risk of death only, with no maturity benefits.
This makes us realize that it is important to know and understand the details of Term Life Insurance Plans.
A Term Insurance Plan is a pure life insurance protection plan that can be bought for a particular time period and to provide financial security to the policy holder’s family in case of any contingency. As Term Insurance does not offer maturity benefit, it offers a lower premium rate.
For example: If a 30-year-old person wants to buy Term Life Insurance of Rs. 1,00,00,000 assured for a tenure of 20 years, then he will have to pay an annual premium of approx Rs. 6000 only.
In the event of the death of a Term Life Insurance policyholder during the policy term, the nominee can claim benefits, either a lump-sum amount or a combination of lump-sum and monthly amount as per your requirement.
In case the policyholder survives after the maturity of the policy, he has to either obtain extended coverage with different payment conditions or forgo the coverage entirely.
What are the benefits of Term Insurance Plan?
- The family gets the lump-sum amount in case of your sudden death.
- It provides financial security to your family as they can pay off all your loans and liabilities at one go.
- It provides money to the family so that they can continue to have the same standard of living.
- It takes care of your family in case of your disability or critical illness.
- It provides supplementary income in case of loss of income due to your accidental disability or illness.
- It helps you to get a lump-sum amount if you are diagnosed with a critical illness.
- Your family gets an additional sum in case of accidental death.
- You get Tax Benefit. Premium paid towards term insurance plan is eligible for tax deductions under section 80C of the Income Tax Act.
Even though most people opt for Life Insurance policies because of their dual benefits of life protection along with returns on the investment, it is advisable to have at least one Term Life Insurance Plan as it provides a higher death benefit in minimum premium amount.
So, whether you looking to secure your children’s future or a looking to safeguard yourself from the treatment expenses of critical ailments, Term Life Insurance Plans covers varied needs. Hence, it is a beneficial option for many.
There are 4 different types of Term Life Insurance Plans based on their coverage and benefit types. If you are looking at a Term Plan with maturity benefits then you can opt for TROP – Term Return of Premium plan.
While we all want our lives to follow a smooth pattern, unfortunately, the uncertainties of life are a given and no one is spared from. A Term Life Insurance Plan is a useful instrument through which you can protect your family’s financial well being in your absence at a small premium, of course! Click here to read more on easy ways to buy Term Life Insurance policy.