What Do I Stand to Gain From Term Insurance?

Did you know that insurance companies in India reward individuals who maintain a healthy lifestyle? There are primarily five types of life insurance policies sold in India: term plans, ULIPs, money-back, whole life and endowment. A term policy is a pure insurance product. while all other types of policies are part investment products. Unlike other products, term cover only offers death benefits. One might question whether this policy is worth investing in, considering that if you survive the tenure, you get nothing.

Benefits of Term Plan

The sole purpose of life insurance is to protect your family’s financial future after your death and this is exactly what a term policy does. However, when you look at other policies, they offer much less cover and the sum assured is also dependent on return on investment. But this is not the only benefit offered by term insurance.

1. Low Cost – It is one of the cheapest of insurance policies. Premium payment towards such a policy is merely a fraction of what you would pay for other plans annually. Ironically, you get a much higher cover by paying much lower premium compared to other insurance products.
   
2. Greater Cover – Being cheaper in nature, you can buy a larger cover. You can choose a sum assured that would help maintain your family’s standard of living, pay off your debts as well as take care of other important expenses, such as a child’s education and marriage. It is ideal to buy a plan that is up to 8 to 10 times your annual income.
   
3. Flexibility – One of the greatest advantages of this policy is its flexibility. The minimum tenure limit is 5 years, while the maximum limit is 30 years. The maximum entry age is 65 years. Flexibility of tenure and cover gives you the opportunity to buy a policy for just the time you want and exactly the amount you need. It is advisable to pick a term that either insures you till your retirement or till you expect your children to become independent. You must also take into account debts, if you are repaying any. Make sure to pick a tenure during which you expect to repay your debts.
   
4. Additional Cover – You can also add riders to enhance your cover. You can buy an accidental rider, which will pay double the sum assured in case of your accidental death.
   
5. Tax Benefits – Much like all other insurance products, it also offer tax benefits of up to Rs. 1.5 lakhs on premium payments each year under section 80C of the Income Tax Act.
   

It is a great idea to buy a term plan online. Online policies tend to be 40 to 50 percent cheaper than their offline counterparts. You can also use the premium calculator available online to calculate the most affordable premium amount.