What Are The Benefits Of Term Life Insurance 1

What Are the Benefits of Term Life Insurance?

11th May 2024 | 10 Views

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What Are The Benefits Of Term Life Insurance

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Uncertainties can strike anytime, anywhere, and to anyone. It is exactly where the #insurance comes to the rescue. Human beings are very aspirational and save and invest to build a better future. However, no one can predict an untoward incident and insurance helps care for your dreams, even in your absence. #Term Life insurance is one such #financial tool that covers your family or dependents for the term mentioned in the policy. It is one of the most convenient and affordable types of life insurance policy available. I have shared detailed insight about the Term Life Insurance in a previous article. Here, I will talk about the #benefits of #term life insurance in more detail.

Read Here – Term Life Insurance: A Step Towards the Safety of Your Loved Ones

What is Term Life Insurance?

Due to the high premium amounts for general life insurance, they mostly remain an unaffordable option for middle and lower-income families.

Term life insurance is a cheaper alternative to the general life insurance policies.

Term life insurance is a type of life insurance that gives death benefits to the nominees of the insured at lower premiums while providing a large amount of life coverage for a set period.

Term insurance plans are mostly available for 10, 20, or 30 years.

It is to be noted that, term life insurance covers death benefits only. Unlike other life insurance plans, it does not provide a savings feature (accumulated cash value).

If the policyholder outlasts the term, the policy collapses and no benefits are paid.

Only despite the availability of death benefits, some amazing features make term life insurance a convenient and popular financial tool.

Let us look at the benefits of term life insurance.

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What Are the Benefits of Term Life Insurance?

1.) Financial Coverage to Family

Term life insurance provides financial security to your loved ones, for the period of coverage, especially if they are dependent on you.

If the policyholder dies during the policy term, the money is given to the beneficiaries, this saves them from sudden financial misery.

Your family gets the blanket of financial safety, even when you are not around.

Term life insurance gives mental tranquility also, knowing that our dependents are properly covered.

2.) High Coverages at Lower Cost 

Term plans offer the option of getting a sufficiently large sum assured at cheap premium rates.

So, even if a policyholder lives past the policy term, he/she doesn’t suffer much loss.

This makes term life insurance an economical option for the middle and low-income sections to provide coverage to their families at affordable rates.

3  3.) Pure Protection Plan 

By eliminating the component of cash value, term life insurance can provide complete protection.

This means you can buy the largest death benefit by minimizing the premium.

They are called pure protection plans because they provide death benefits to the family of the policyholder in case of his/her untimely demise.

However, no payout is made if the policyholder outlives the policy period.

What Are The Benefits Of Term Life Insurance 2

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4.) Covid-19 Coverage 

We all know that coronavirus is here to stay, just like other pathogens like Ebola, dengue, etc.

COVID-19 term life insurance provides death benefits to the beneficiaries or the family of the life assured in case of death due to coronavirus.

 5.) No Medical Checkups Required

The sum assured in term life insurance is calculated based on age, medical history, lifestyle, habits, etc., however, the insured can avail of the term policy without undergoing a medical examination.

This depends upon the insurance company, the amount of sum assured, and the insured’s age. 

6.) Easy Claim Settlement 

The claim settlement in the case of term life insurance is comparatively simpler and a stress-free process.

Mostly the process of claim-settlement happens within 30 days of filing the claim.

2   7.) Tax Benefits

Term life insurance has tax benefits under sections 80C, 80D, and 10D.

  • ·      Benefits under Sec. 80C – Section 80C of the Income Tax Act, 1961 states that the insured can avail of tax benefits on the premium paid. Under this section, deductions of up to Rs. 1.5 lacs are allowed.
  • ·       Benefits under Sec. 80D -Section 80D allows deductions up to Rs. 25,000 if the policyholder has opted for a health-related rider (critical illness, surgical care, or hospital care rider) with their term life insurance.
  • ·       Benefits under Sec. 10D –The section provides the entire insurance amount to be given to the nominee without any deductions of taxes on the amount, in case of the demise of the insurance holder during the policy term.

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8.) Financial Freedom to Family

There is no limitation on how the family or beneficiaries can spend the money.

They can spend the money on education, medical bills, paying off their debts, etc.

The plan also provides the ease of choosing a lump-sum payment or monthly payouts of sum assured. 

2  9.) Easy Convertibility to Other Plans 

Some types of term life insurance plans, such as convertible plans, allow the policyholder to change it to a whole life plan.

It is to be noted this causes the increase in the amount of premium charged by the insurer.

Also, the policyholder has to initiate the conversion process as it does not happen automatically.

However, this can be a win-win for the policyholder if he/she starts the policy at an early age. 

The policyholder can buy the term plan, which comes at a cheaper rate, during the initial years of life, and convert it to whole life insurance later.

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Takeaway Message

Term life insurance is an important financial tool of protection that must be added to one’s portfolio at an early age.

The policy also gives peace of mind – that our dependents can fulfill their needs even when we are not around.

However, certain things must be kept in mind while choosing term life insurance:

  • ·     The policy seeker must calculate the coverage amount properly by accounting for the financial needs and obligations of the family.
  • ·       It is always recommended to start an insurance policy early. The younger and healthier the policy seeker is, the lesser the premium amounts.
  • ·       The period of the plan must also be chosen carefully by accounting for the age, health, and financial obligations.

Mostly, term plans are available for 10, 20, and 30 years.

  • ·       Always buy the insurance policy from a reputed insurance company.
  • ·       Always compare the premiums of different insurance companies to know if you are getting the best deal.

Disclaimer: The views expressed in this article are the writer’s opinions and should not be considered a substitute for an expert’s advice.

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