A term insurance plan is one of the simplest and purest forms of life insurance policies. It requires you to pay premiums for a predefined period, usually between ten and thirty years, and in the event of your death, the cash benefit will be paid to anyone you name as your beneficiary.
These plans are very cost-efficient as compared to a whole life policy but carry no cash value. Moreover, as compared to a traditional insurance plan, term plans do not provide any payout after completion of tenure and no other payout other than the death benefit.
The majority of term plans are level plans, which means the monthly premium you pay for the policy stays the same for the complete tenure of your policy. Before you get term insurance for yourself, you should have insights into some key details to gain the most benefits out of it.
This article describes the basics of term insurance and helps you know how to choose the one that provides you with the most promising benefits.
Features of a Term Insurance Plan
There are multiple instances where term insurance can be an ideal investment avenue for the safety of your loved ones. Let’s have a look at some salient features of term plans that make them a preferable insurance policy:
Comprehensive Coverage Tenure
Numerous term plans provide a long coverage duration that helps you stay covered for a considerable age. Depending on the plan you choose, you can get coverage of up to 30-35 years and accumulate a huge financial corpus for your family.
2. Dual Tax Benefits
When you purchase term insurance, you can enjoy tax benefits in two instances. As per sections 80C and 10(10d) of the Income Tax Act of India, the premiums paid for the policy are tax-free with deductions of up to Rs. 1.5 Lakhs and the benefits your nominees receive are also tax-free.
3. Benefits Payable
Term insurance only provides a death benefit payable upon the death of the policyholder. However, in case you survive till the policy tenure, you won’t get any benefits. There are some plans in the market that provide term plans with a return of premium option that pays back the premiums you’ve paid in case of your survival.
4. Low Premiums
The best thing about term plans is that they provide you with a large coverage at very low premium costs. As they only cover you for the risk of death, premiums tend to be lower than conventional insurance plans. Therefore, you can easily maintain high coverage without affecting your daily expenses.
5. High Sum Assured
When you purchase a term plan, your primary objective is to provide financial security to your family. It’s only possible when you have sufficient coverage to help your family meet their expenses after your unfortunate demise.
Fortunately, term plans provide a significantly high sum assured, which is at least 10-12 times your annual income. Therefore, term plans are ideal for individuals looking to get optimal coverage for their family’s financially sustainable future.
Choosing The Right Term Plan – Why Is It Necessary?
There are many insurance providers in the market that provide term plans at varying rates. Due to their high availability, you need to be thoughtful about your choices as your decision determines how efficient your investment is.
Choosing the wrong plan will not only prevent you from making the most out of your investment, but you may also regret making the wrong choice for your family’s future. That’s why it is necessary to determine certain aspects of a term plan before zeroing it.
As you’re taking a term plan to safeguard your family’s future, you must make sure that you gain adequate cover by assessing your human life value, which is a dividend of an individual’s salary to their liabilities like loans.
Depending on your HLV, you should choose a plan that covers your family’s needs without any hardship. Moreover, you should also consider the cost of your policy as certain insurance providers offer additional discounts for women and non-smokers.
Additionally, it is also worth taking a look at what type of riders a plan makes available for you. Riders are not only essential to extend the coverage of your policy, but it also allows you to tweak your policy as per your future requirements.
How A Term Insurance Calculator Can Help You Find the Right Plan?
A term insurance calculator is an online tool that allows you to calculate your policy’s premiums and other details in a very convenient manner. You just have to access the tool through a browser and you can find a good policy based on the aforementioned factors without any extensive research.
With a term insurance premium calculator, you simply have to fill in the required details such as your name, date of birth, smoking habits, required sum assured, and so on and the tool will calculate the expected premiums for your plan automatically in an instant.
On top of that, you may also receive personalized recommendations based on your input to help you find an ideal term plan that fulfils your financial goals. It’s highly recommended to use a term insurance premium calculator before short listing a policy for yourself.
It even saves you hours of research and analysis on multiple options available in the market.
If you want to help your family sustain a comfortable future in your absence, you should invest in a term plan. These plans are cost-effective than standard plans and also provide a comprehensive list of features. Moreover, with the advent of technology, you can now facilitate your decision-making process with automated term insurance premium calculators. Therefore, make sure you invest in a term plan right away to secure your family’s future.