Top 7 Term Insurance Benefits Everyone Should Know

Theses polices are a type of life insurance that offers coverage for a fixed period. In case the life policyholder is deceased during that period, the nominee will get the sum assured. Many people prefer term insurance because it covers a low cost and solely offers financial protection.

This term insurance benefits include its simplicity, flexibility and higher life coverage at a low cost. But it does not offer maturity benefits, unlike other insurance. Still, there are some attractive benefits that you can consider.

Benefit 1: High Coverage at Low Premium

One of the most attractive advantages of term insurance is the ability to secure a large life cover at highly affordable policy rates. In comparison to traditional life insurance plans, which combine investment and insurance. Term insurance provides pure life coverage.

For instance, a 30-year-old person who doesn’t smoke can secure a good term policy for a small fee. Being affordable gives people the ability to buy sufficient insurance when they are still young. It makes sure the family is secure financially as well as emotionally.

Benefit 2: Financial Security for Your Family

The main benefit of term insurance is that it helps your dependents by giving them money and assurance if you pass away. In some families, only one person is responsible for most of the family’s financial support.

Having a term life insurance allows the policyholder’s family to pay for basic and regular needs. This sense of security is one of the most important insurance benefits that any policyholder can offer to their loved ones.

Benefit 3: Flexible Policy Terms and Options

Modern term plans offer high levels of flexibility to match individual goals and life stages. One of the less discussed yet important terms in insurance benefits is the ability to tailor your policy term, premium payment mode and payout structure.

These are some key flexible abilities:

• Policy duration: Make your policy cover the period you are planning for, like 10 to 30
• Premium Payment Options: Policyholders are allowed to pay premiums once a year, twice a year, repeatedly each quarter, or monthly. Limited-pay plans are optional, since with them you pay for a shorter period but keep coverage for a longer time.

You can choose term insurance for immediate financial protection or for your lifelong needs up to retirement.

Benefit 4: Tax Benefits Under Section 80C & 10(10D)

As well as giving financial security, term insurance allows you to save on taxes. You can get a maximum tax deduction of ₹1.5 lakh a year under section 80C, when you pay premiums for your term life insurance.

Besides, the amount given under Section 10(10D) to the nominee from the life insurance policy is tax-free. This ensures your family receives the full sum assured without any tax liability or deduction. This adds to the policy value as an efficient tax-saving tool. If your policy includes riders such as critical illness benefits, you can also claim deductions under Section 80D. This covers medical insurance premiums.

The dual advantages of financial safety and tax efficiency strengthen the overall insurance benefits that the term plans deliver*.

Benefit 5: Additional Riders for Enhanced Protection

Some of the popular riders are as follows:

• Accidental Death Rider: It offers an additional sum assured in case of demise due to an accident.
• Critical illness rider: This feature pays a lump sum amount upon diagnosis of life-threatening conditions such as cancer, heart attack or stroke.
• Waiver of Premium: Under this rider, future surcharges are waived if the policyholder suffers from disability or critical illness.
• Income benefit rider: This one provides regular monthly income to the nominee in addition to the lump sum payout.

Adding riders is an affordable way to boost the importance of your policy. Picking a group of riders allows your insurance to protect you from disability, sickness and loss of income.

Benefit 6: Simple, Transparent, and Easy to Buy

Unlike investment-linked polices or complex Unit Linked Insurance Plans (ULIPs), term insurance is simple and easy to understand. The terms are clearly defined, which state that the nominee of the policyholder will receive the sum assured upon demise or the policy ends without any payout.

Due to digitisation, purchasing term insurance has become more convenient. Many insurers offer fully digital onboarding with features such as e-KYC, online medical declaration and paperless documentation. Online policies also tend to have lower premiums because they reduce distribution costs.

The transparency in pricing and terms ensures the policyholder understands what they are signing up for. With no hidden fees, term insurance is among the most trusted insurance benefits available.

Benefit 7: Return of Premium Option

Some people might find it disadvantageous that a typical term plan does not give a payout if the policyholder is still alive after the policy term. To help with this issue, insurers are providing Return of premium coverage. They are given back all the premiums paid (but not including GST and rider amounts) if they outlive their policy term.

Even though ROP plans have higher rates, their feature of keeping the basic sum intact attracts people who aim to preserve their money.

Advantages of ROP are:

• Provides peace of mind to buyers concerned about losing money.
• Offers financial return while still covering risk during the policy term.
• Acts as a low-risk savings option with insurance.

This feature strengthens the term insurance benefits for individuals who are looking for both security and a return. It is ideal for conservative savers and first-time policyholders.

FAQs

1. Can I buy multiple term insurance plans?

It is possible to get multiple life insurance policies in order to achieve several financial aims. For instance, one policy might pay for your home mortgage, and another would be used to continue paying your family’s income if something unexpected happened to you.

Yet, insurers will look at all duties and your income before giving a total policy amount. Ensuring that your declarations are correct helps the process of settling your claims.

2. Can I change my nominee later?

You are able to replace your nominee whenever you want during the policy’s coverage period. When you go through events such as getting married or having a child, you may need to change your nominations. You should send a written letter plus nominee’s proof of identity to your insurance company. Updating the information of the beneficiary ensures they will get the benefits when required.

3. What happens if I survive the policy term?

Regular term plans will not payout anything at the term’s end, just like other insurance policies. However, if you picked a Return of premium insurance, you will be reimbursed for all the premiums you have paid throughout the years. In any case, surviving the term means you have taken care of your family during the time when money can be most difficult to manage.