image title
TERM INSURANCE

Term Insurance policy and its Benefits

Janhavi Shinde Janhavi Shinde 10 January 2019

We often come across the word, ‘Term Insurance. ’But not many know the benefits of buying one.. This article will dive you deep with term plan and the benefit it offers

image title

What is Term Insurance Policy?

A term insurance policy is a type of life insurance plan which is for a specified period. As the name suggests, the ‘term insurance’ is the policy where the sum assured of this policy is payable to the nominee in event of the death of the insured. The term insurance plan is designed to safeguard the future financial needs of the insured’s family or the nominee, in event of the death of the insured. Buying a term insurance plan is beneficial as it ensures that you can plan for the financial security of your family in your absence.

The term life insurance plan is the minimum that you can plan for the financial stability of your loved ones. Term insurance plan will provide a financial cushion and to your family in case of your sudden death. It offers a death benefit in the form of sum assured to your beneficiaries to pay off the liabilities or can save it for the future financial requirement. For understanding in detail about the term insurance plan, it is important to know its benefits.

So following are the most important benefits of buying a term life insurance plan:

  • Simple

    Term insurance plans are less complicated life insurance plans. They are very simple to understand. As the name suggests term insurance offers death benefit and not maturity benefit. Under this plan, the life cover is given for a specified period so if the policyholder stops paying the premium then the risk cover of the term insurance comes to an end.

  • Low Premium

    The biggest advantage of a term insurance plan is that the plan offers a high sum assured at lowest premiums. The premium of term life insurance plan is lesser than any other variant of life insurance plans. Thus the customers can opt for higher sum assured at a relatively lower premium. Besides, the premiums that you pay here, remains unchanged for the rest of your policy period. Coverfox.com helps you obtain the premium calculation as easy as a pie.

  • Safety

    Buy term insurance if you want to safeguard the future of your family and loved ones. Buying a term insurance policy will ensure that you have secured and safeguarded all the financial needs of your family. The term insurance plan provides a safety net to the family in case of any eventuality.

  • Tax Benefit

    Apart from safety, buying a term insurance policy is advantageous as it offers tax benefit under Section 80C. Besides, the sum assured that your nominees receive post your death are also tax-free under Section 10 (10D), of the Income Tax Act.

Terms & Conditions of Term Insurance Plans

Your nominee will receive a sum assured as a death benefit post your demise.. However, every insurance provider has their certain set of terms and conditions related to exclusions of term insurance plans.

These exclusions are mentioned in every term insurance brochure. So while availing a term insurance plan, it is very important to understand these terms and conditions and the exclusions under a specific plan as it helpful in getting a clear understanding about the plan.

Certain common exclusions under term insurance plans are: Suicide or death due to self-inflicted injury, consumption of drugs or narcotics, smoking, alcohol, sexually transmitted diseases like HIV, AIDS etc. death due to criminal activities, pre-existing medical conditions etc. So the life insurance company have a complete right to deny the death claim if the policyholder has failed to provide true and complete personal health details at the time of submitting the proposal form.

Tax Laws and Term Life Insurance

Income Tax Act allows certain Tax savings or benefits upon availing term insurance plans. But kindly note that even though the term insurance plans allow certain tax benefits but it should not be the main motive while purchasing a term insurance policy. Nevertheless, following are the tax benefits offered by term insurance plan as per prevailing tax laws.

Benefits under Section 80C

Term insurance premiums up to Rs. 1.5 lakh p.a. are allowed tax exemptions as per Section 80C of the Indian Income Tax Act; however, this benefit can be availed subject to fulfillment of certain conditions. This benefit can be availed for the premiums paid for term insurance policy of spouse and/or children.

Benefits under Section 10 (10D)

The benefit received under section 10 (10D) of Income Tax Act is related to the death benefit received from the Term insurance plans. The death benefit, including bonuses if any, are fully exempted under the provisions of Section 10 (10D) of the Income Tax Act 1961. However, this benefit is not applicable under certain conditions.

Benefits under Section 80D

Section 80D of the Income Tax Act, 1961 allows tax benefit on the amount of insurance premium paid for health insurance. So if your term insurance plan offers inbuilt or additional cover in form of various riders like critical illness rider, hospital care rider, surgical care rider etc. then you can utilize this benefit and can avail tax benefit under Section 80D of the Income Tax Act. However, this benefit can be availed subject to fulfillment of certain conditions. The benefits under Section80D can be availed by the assesse for the premium paid for himself, spouse, dependent children, and parents.

But, amongst the plethora of term insurance plans available, which one should YOU opt for?

Well, to clear this dilemma, we have jotted down a few best life insurance plans in India for you.

A best term life insurance plan is the one that helps you in planning efficiently and effectively for the future financial needs of your family and loved ones.

There are different variants of a term insurance plan and one must take into consideration their financial goals before buying any term life insurance plan.

Following is a list of the best term insurance plans in India for you:

  • LIC e-Term Insurance Plan

  • ICICI Pru iProtect Smart

  • SBI Smart Shield

  • HDFC Click 2 Protect Plus

  • Max Online Term Plan Plus

Thus a Term plan is a right plan only if it fulfills your financial goals and offers features that you think shall benefit your family and loved ones after your death.

However, times are changing. Gone are the days where the term insurance was purchased from the office of life insurance provider or from an agent or advisor as today the trend is of buying online term insurance plan.

Today the recent trend suggests that buying term insurance plan online is beneficial for the following reasons:

  • Term insurance plan helps you to save on the premium amount

  • It helps you to compare amongst various plans of many insurance providers

  • The entire process of buying online term insurance plan is transparent and easy

  • Online term insurance plans offer higher sum assured at a certain premium as compared to buying term insurance plans from the offline channel.

  • Online process of buying term insurance process has an easy reach to customers and it offers utmost flexibility to the customers as the online policy can be purchased anytime and anywhere

recommended : Advantage of Term Insurance as a Pure Risk Protection Cover

Janhavi Shinde
Written by Janhavi Shinde
Right from being a Flight Attendant to a Banker and now to a Content Writer, she has tasted success in all the fields. The kinda girl who loves pets and knows how to manage difficult people and events.