Categories: Finance

Understanding Term Insurance: Your Key to Financial Security

Term insurance is life insurance that offers coverage for a specified time duration or tenure. Insurance is a necessity given the unpredictability of life and health. Term insurance provides a financial benefit to the nominee in case of any unforeseen event, such as the death of the insured during the term of the policy. Term insurance policies offer high life cover in exchange for low premiums. It is recommended that individuals with financial dependents opt for term insurance to guarantee their financial future.

This insurance provides dual benefits by offering both guaranteed financial protection and tax savings. We have listed below the key benefits of opting for term insurance policies:

1. Low premiums

The life insurance policies are affordable for all income and age ranges. The insured individual can obtain high-life coverage at affordable and low premiums. These term insurances can be purchased by individuals as young as 18 years old.

2. Payout options

The insured has the option to make premium payments as per their financial convenience. The term insurance offers flexible payment options such as monthly, quarterly, or yearly. The death benefit is usually paid to the nominee in lump sum or installments.

3. Financial security

Term insurance provides guaranteed financial coverage for a longer time period. Individuals usually opt for term insurance when they attain the legal age of 18. Term insurance guarantees financial security through death benefit payout to the insured’s family.

4. Ease of purchase

All the major insurance companies offer online consultations to all interested individuals. Individuals have the option to consult the experts via instant chat or phone and buy online. Individuals can choose among multiple plans catered to their financial goals and benefits and opt for a suitable term policy at lucrative premiums.

5. Additional Riders

To combat the financial impact of any unforeseen accident, the term insurance policies provide an option to include additional add-ons or riders. Accidents or terminal illnesses may result in loss of income or the ability to earn a livelihood. The inclusion of riders, such as accident coverage, disability coverage, critical illness coverage, etc., is beneficial for financing the additional expenses.

6. Flexible coverage

The financial needs of individuals keep evolving throughout life with changing priorities, increasing family members, and increasing expenses. The Term Insurance policy can be altered by increasing or decreasing the sum assured as per the requirement.

7. Tax benefit

The premium paid towards Term Insurance can be claimed as a deduction to reduce their tax liability. Section 80C of the Income-tax Act, 1961 allows a deduction of up to INR 1.5 Lakh of the premium paid towards Term Insurance. However, the premium paid towards additional riders is eligible to be claimed under section 80D.

Key Things To Note Before Buying A Whole Life Insurance

Market experts recommend all age groups of investors, such as working professionals, newly-married couples, parents, retired personnel, and taxpayers, to invest in Term Insurance policies. The payout from the term policies ensures financial security and the generation of adequate funds in an emergency. It is essential to refer to the policy inclusions and exclusions prior to investing in any Term Insurance.