Why is the term life insurance beneficial?

1. Why is the term life insurance beneficial? Death is uncertain and if it strikes the breadwinner prematurely, the family faces a severe financial loss accompanied by an emotional one. While it is impossible to compensate the bereaved family for the emotional loss suffered, the financial loss can be compensated through a term life insurance policy. A term life insurance plan is a life insurance policy that covers the risk of premature death. In case of death of the insured during the policy tenure, the plan pays the sum assured to the family thereby giving them financial assistance in difficult times. Besides the inherent nature of ​term insurance plans​, these policies have other benefits too which make them a must in your financial portfolio. Let’s, therefore, have a look at the benefits of term insurance plans – Benefits of term insurance ● High coverage at low premiums One of the most beneficial advantages of a term life insurance policy is that it has very low premiums. Since the plan covers only the risk of death during the policy tenure, the premiums are low. Such low premiums allow you to avail higher coverage levels which help you ensure that your family would be well taken care of even in your absence. ● Different types of plans to suit individual preferences There are different types of term life insurance plans which are available in the market. These include the following – o Level term plans which provide a uniform level of coverage throughout the policy tenure Increasing term plans where the coverage increases every year Decreasing term plans where the coverage reduces every year Return of premium plans which refund the premium paid if the plan matures o o o Given the different types of term life insurance plans, you can choose a plan which best suits your coverage requirements. For instance, if you have a loan to your name, a decreasing term plan is suitable where the sum assured can reflect the decreasing amount of loan. In case of death, the plan’s sum assured would pay off the outstanding loan balance thereby avoiding any financial burden to fall on your family. Similarly, the return of premium plans is suitable for those who are looking for a return from the policy on maturity. ● Riders help in increasing the coverage Term insurance plans also allow you the option of riders to enhance your coverage. Riders are additional coverage clauses that can be added to the basic term plan at an additional premium. These clauses cover specific contingencies and when the covered contingencies occur, you get an additional benefit. Some of the common riders include the following – o Accidental death and disablement benefit rider which pays an additional benefit in case of accidental death or disablement

2. o Critical illness rider which pays an additional benefit in case of diagnosis of any covered critical illness Term rider which pays an additional benefit in case of death during the policy tenure o You can choose one or more of the available riders and opt for an all-round coverage from your term life insurance plan. ● Tax benefits Term insurance plans not only provide you with unmatched financial security, but they also help you lower your tax burden. Premiums paid towards a term insurance policy are allowed as a deduction under Section 80C up to INR 1.5 lakhs. This deduction is allowed if the premium is limited to 10% of the sum assured. Similarly, the death benefit paid under the plan is also completely tax-free under Section 10 (10D) if the sum assured is at least 10 times the premium paid. Thus, term plans give you dual tax benefits and help in reducing your tax liability. These benefits of term insurance plans make these plans important. So, if you want to create financial security for your family to invest in a term life insurance policy with an optimal coverage level and gift your family peace of mind.