Coverfox.com
  • Insurance
    • Car
      • Car Insurance
      • Companies
      • Third party car insurance
      • Comprehensive car insurance
      • Car insurance calculator
      • New car insurance
      • Zero Dep Car Insurance
      • Buy Car Insurance
      • Compare Car Insurance
      • Car Insurance Articles
      • Cashless Garages
    • Bike
      • Two Wheeler Insurance
      • Two Wheeler Insurance Companies
      • Two Wheeler Insurance Claim
      • Two Wheeler premium Calculator
      • Third party Bike insurance
      • Multiyear Bike Insurance
      • Bike Insurance Articles
    • Health
      • Health Insurance
      • Companies
      • Mediclaim Policy
      • Individual Health Insurance plans
      • Critical illness insurance
      • Senior citizen health insurance
      • Arogya sanjeevani policy
      • Health Insurance Articles
      • Network Hospitals
    • Term
      • Term Insurance
      • Companies
      • Life insurance
      • Life Insurance calculator
      • Term Insurance calculator
      • Life Insurance Plans
      • 1 crore term insurance
      • Compare Term Insurance
      • Buy Term Insurance
      • Term Insurance Renewals
      • Term Insurance Articles
      • Life Insurance Articles
  • About Coverfox
    • About us
    • Insurance Blog
  • Claims
  • Contact us
  • Login
image title
TERM INSURANCE

All You Need to Know About of Term Insurance

Joan Mathews Joan Mathews 04 December 2018

Term insurance is the simplest form of insurance product in the market. In this article, we will walk you through its meaning, importance and benefits so that you're thorough with how it functions before you avail one.

All know about term insurance

Term insurance is a pure protection life insurance plan that covers the risk of untimely death of the life assured during the policy term. The nominated beneficiary will be paid the death benefit (referred to as sum assured) if the life assured passes away during the policy tenure. However, once the policy has reached its maturity, the insurance company is not liable to return the premiums paid, unless the individual has opted for a Term Insurance Return of Premium (TROP) policy.

Term insurance plans can be availed for a defined period of time. The premium amount decided at the time of availing the policy will remain fixed throughout the policy term. With regards to the sum assured, applicants are usually given the choice of selecting different payout options - lump sum, staggered or lumpsum + staggered. Some insurance companies even offer to customise the plan as per the specific needs and requirements of the life assured. The payout from the policy can be used in any manner the beneficiary wishes - to settle loans, pay for school or college fees, etc.

When compared with other life insurance products, term plans are the most affordable since they do not have the savings component. The insurance premiums charged are only for mortality charges and sales & administration expenses. Since there is no savings component to it, the policy does not pay out any maturity benefits, as is the case with endowment policies and ULIPs. This feature makes term life insurance plans the simplest and most-affordable form of life cover available.

Why is necessary to have Term Insurance?

Having a term insurance plan is essential for anyone who has dependent family members or pending debts to pay off. The sum assured levels are high and premiums rates low, which in turn helps to ensure that the beneficiary of the policyholder continues to lead the same lifestyle, even when the policyholder is no more. In other words, the sum assured from a term insurance plan allows the loved ones of the deceased to continue with their day-to-day activities without feeling any financial pinch while running the household.

Ideally, term life insurance should be the first life insurance plan an individual must buy to ensure that his or her family remains financially secure should the individual be no more. Given that it acts as a safety net, having this insurance plan is important. In addition to all this, term insurance also gives policyholders a tax advantage – i) Tax deduction can be claimed on premiums paid under Section 80C of the Income Tax Act, 1961, and ii) Death benefits paid to nominees are tax-free under Section 10(10D).

Benefits of Term Insurance

There are a number of benefits enjoyed by policyholders of term insurance covers. Here is a look at some of them:

  • Simplicity - Term life insurance plans are comparatively much easier to understand when compared with cash value plans (whole life policies). All that the life assured has to do is pay the premiums and he or she will get the insurance cover for the chosen term. If payments are stopped midway, the policy lapses.

  • Low premiums - Term insurance is a pure risk plan, which means it only pays the coverage amount if the life assured passes away during the policy period. Since there isn't any investment component to such plans, the premiums charged are low when compared with endowment policies and ULIPs.

  • Tax benefits - Tax deduction under Section 80C of the Income Tax Act, 1961, can be claimed for premiums paid towards a term insurance cover. The maximum deduction that can be availed under this section is Rs. 1,50,000. Additionally, the death benefit proceeds from the policy are tax-free under Section 10(10D) of the Income Tax Act.

  • Flexibility - Many modern term life insurance plans are convertible. Individuals can convert their term insurance policies into endowment plans for the same premium amount with associated decrease in sum assured.

Conclusion

In the past, buying a term insurance policy was more of a choice. However, today it has become a necessity. Going without a financial cover is a big risk to take, since the loved ones would bear the brunt of it. Keep the above-listed points in mind while buying a term plan as this will allow one to find the best term plan to cover himself or herself.

Be sure about Term Life Insurance.
expert assist 100% buying & claim support
express claims Free Nominee Assistance
program
Rated 4.7/5

for Customer Satisfaction on Facebook
5,00,000+
Policies sold
last year
Joan Mathews
Written by Joan Mathews
Joan has over 4 years of experience writing for the BFSI industry. She enjoys watching mystery TV series, listening to 80s classics and spending time with her furbabies.
MUST READ
POPULAR OTHERS
Term Insurance Plan for 40 Year Olds
Best Term Insurance Plan for 40 Year Olds in 2024
1cr Term Insurance
Best ₹1 Crore Term Insurance Plans for 2024
Group Term Insurance
Group Term Life Insurance: Definition, How It Works, and Its Pros & Cons
bonus offered in term insurance
Various Bonus Types Offered By A Life Insurance Policy
irdai rules for term insurance
Rules Set by IRDAI for Purchasing Term Insurance in India
TROP vs Life insurance plans
Difference between TROP and Other Life Insurance Plans
  • Term Insurance Companies
  • Term Insurance
  • LIC Term Insurance
  • SBI Term Insurance
  • HDFC Term Insurance
  • Tata Aia Term Insurance
  • HDFC life click 2 protect plus 3d plus
  • Popular Searched Plans
  • Max life term plan plus
  • ICICI pru iprotect smart term plan
  • PNB metlife mera term plan
  • Canara hsbc obe iselect lumpsum term plan
  • Aegon life iterm plan
  • Birla sun life protect at ease term plan
  • More From Tax
  • Income Tax
  • GST
  • eFiling Income Tax
  • Income Tax Calculator
  • Income Tax Slab
  • Income Tax Refund
  • Popular Health Pages
  • Mediclaim Policy
  • Senior Citizen Health Insurance
  • Health Insurance for Parents
  • Critical Illness Insurance
  • Cancer Insurance
  • Health Insurance Premium Calculator
  • Life Insurance Types
  • ULIP Plans
  • Endowment Policy
  • Whole Life Insurance
  • Child Plan
  • Pension Plan
  • Investment Plan
  • GENERAL INSURANCE COMPANIES
  • National insurance
  • Oriental insurance
  • United India Insurance
  • Relience General Insurance
  • New India Assurance
  • TATA AIG General Insurance
icon Term Insurance icon Articles icon All You Need To Know About Term Insurance
×

Get Lowest Rates for term Insurance

  • Secure
  • Licensed By
  • Payment Options
  • Car Insurance
  • Bike Insurance
  • Motor Insurance
  • Car Insurance Premium Calculator
  • Family Health Insurance
  • Senior Citizens Insurance
  • Group Insurance
  • Corona Rakshak Policy
  • Corona Kavach Policy
  • Super Topup Plan
  • Term Insurance
  • ULIP
  • e-Term Plan
  • 1 Cr Term Insurance
  • कार इन्शुरन्स
  • टू व्हीलर इंश्योरेंस
  • टर्म इंश्योरेंस
  • हेल्थ इंश्योरेंस
  • मेडिक्लेम पॉलिसी
  • Learn About Insurance
  • Network Hospitals
  • Cashless Garages
  • Get Android App
  • Get iOS App
  • Learn
  • About Us
  • Contact Us
  • Careers
  • Sitemap
  • FAQs
Connect with us
Become a Partner
Become a Coverdrive POS Agent

Coverfox Insurance Broking Pvt. Ltd. : C Wing, 6111-6118, 6th Floor, Oberoi Garden Estate, Chandivali Farm Road, Chandivali, Andheri (East), Mumbai - 400072

Licence No. 478 , IRDA Direct Broker Code: IRDA/ DB 556/ 13 , Valid till: 26/12/2025, CIN: U66000MH2013PTC243810

  • Shipping & Delivery Policy
  • Privacy Policy
  • Legal Policies
  • Cancellation & Refund
  • Terms & Conditions
Copyright © 2025 Coverfox.com. All Rights Reserved