With numerous insurance products available in the market, making the right choice often becomes a cumbersome task. You may analyze the features and benefits of various types of insurance plans and make a choice based on your needs and requirements.
You may consider investing in a term plan, also known as a pure life insurance cover. As the name suggests, a term insurance policy offers coverage for a fixed term. In case of an unfortunate event of death during the term of the policy, the insured’s loved ones are entitled to receive a lump sum amount known as a death benefit. This amount may be used to meet their various financial obligations.
Quite contrary to the popular belief, purchasing a term policy offers value for money. Though such a policy does not offer any survival or maturity benefits, it provides financial security to the policyholder’s family/nominee in case of an unfortunate death. This provides a high degree of financial security during difficult times.
Following are five reasons why a term insurance scheme is not only a smart investment option but also a highly protective alternative.
- Provides financial protection
In case of a premature death, the policyholder’s family may use the death benefit amount to meet their lifestyle needs as well as other necessary monetary expenses. The received amount may be used to pay off any debt the policyholder may have borrowed, and meet the policyholder’s children’s educational expenses. This amount also acts as an income replacement, in case the policyholder was the only earning member of the family. It is therefore important to choose a sum assured amount keeping your family’s financial requirements in mind.
- Offers low premium cost
Term insurance offers the lowest premium as compared to any other type of insurance plans. This is because the entire premium is used for covering risk and not used for investment purpose. Besides, term insurance offers a high sum assured amount for an affordable amount.
- Provides a high degree of flexibility
Since term insurance is a pure protection plan, opting out of it is comparatively easier than cash value policies. In case you wish to stop availing of the benefits of this insurance policy, you may simply stop paying the premium. By doing so, your risk cover ceases to exist and the policy ends.
- Offers additional coverage through riders
Term insurance plans offer additional coverage through add-ons, also known as riders. Some of the common rider options available with a term insurance plan include accidental death rider, critical illness rider, partial or permanent disability rider, and waiver of premium rider, among others. You may avail of the benefits of such riders by paying a nominal cost.
- Helps you save on tax
One of the numerous term insurance benefits is the tax advantage. You may avail of deductions under Section 80C and 80CCC of the Income Tax Act, 1961. Premiums payable towards term insurance for self, spouse, or dependent children are eligible for tax deductions up to a maximum limit of 1.5 lakh. Besides, the death benefit received by the nominee is exempted under Section 10(10D).
The aforementioned points highlight the numerous reasons why a term plan is a smart investment option. You may, therefore, invest in such a type of insurance and secure your family financially. You may compare various providers and their offerings. After thorough research, you may choose a term insurance policy that offers the best features and benefits at the most competitive price.