Term insurance plan and its benefits

Though none of us like to think that something bad can happen to us, it better to be prepared for the worst. Life is unpredictable and buying the best term policy is the better way one can secure a family’s financial future in case of unfortunate events.

Here are the major benefits of term policy other than the underlying death benefit rider.

1. Complete financial security:

Term insurance is the only type of insurance that offers high policy coverage at a low premium cost. So, the policy buyers even with the limited assets can provide complete financial security to their family at a low cost.

2. Lower premium:

Unlike other policies, term insurance plans
 are easy to understand and have similar structures. So, one can compare different term policies based on their competitive pricing and low premium cost. This makes it easier for the buyer to choose the term plan that fits right with their needs and goals.

3. Tax benefits:

Other than the most important benefit – protecting your family’s financial security in case of any unfortunate event – term insurance policies provide tax benefits as well.

Under the Income Tax Act (ITA) Section 80C, you can avail term insurance tax benefit on the premium paid towards the policy up to Rs. 1.5 lakhs.

Under Income Tax Act (ITA) Section 10(10D) the maturity benefit offered by term insurance policy up to a certain amount is also eligible for tax exemption.

4. Safeguard against liabilities:

Another benefit of term insurance is it safeguards your family against liabilities. Throughout our life, most of us take several liabilities such as home or car loans. In case of an unfortunate event, your family has to repay these debts over time. The best term plan helps your dependents manage such financial problems and arm your family to protect and keep their financial security intact.

Now that you know the benefits of buying a term policy, getting enough coverage amount is even more important. According to a general thumb rule, a policy buyer should buy term insurance that provides a cover at least eight times their annual income.

You can even increase your assured sum after buying a policy as many term insurance plans offer an opportunity to increase the assured sum year on year, thus making sure you are adequately insured.