Advantages Of a Term Insurance Plan Over Other Types Of Life Insurance Plans
Life insurance is a vital aspect of your life through which you can save your loved ones from future uncertainties and financial burdens in case of your untimely demise. Nowadays, the market offers a variety of life insurance products, including a term plan, whole life insurance, and endowment plans. The best term plans can offer many advantages over other policies, such as an extensive life cover and much more.
Let us look at what the best term plan can offer regarding benefits and features.
What is Term Insurance?
Term insurance is a life insurance policy that offers life cover protection to your family for a predetermined period. In the event of the policyholder’s demise in the active term insurance period, the death benefit will be paid to the beneficiaries. However, the term policy will not pay out any benefits if you survive the policy term. Pure term insurance plans do not mature at the end of the term but are terminated.
Benefits of Term Insurance
- Lower Premiums: Term insurance policies are frequently the less expensive type of life insurance as it simply provides insurance coverage as opposed to other life insurance plans that also offer investment options. In addition, Term insurance policies do not provide a maturity benefit which helps keep premiums low, making term insurance policies an accessible choice for many.
- Higher Coverage: Term insurance policies provide more excellent coverage than other types of life insurance. It is because term insurance rates are lower than those for other life insurance policies, allowing you to purchase a higher level of coverage for the same premium cost.
- Flexible Plans: One of the many advantages of life insurance is the choice of policies and the same applies to term insurance plans. Term policies allow you to customise your coverage and policy term, giving you a significant degree of flexibility.
- Tax Benefits: Under Section 80C of the Income Tax Act of 1961, term insurance premiums are eligible for tax benefits up to ₹1.5 lakhs annually. Moreover, Section 10(10D) of the Income Tax Act of 1961 exempts the death benefit paid to your nominee from taxes.
- Simple and Transparent: Since term insurance plans only have a life cover that offers death benefits, these policies are easy to understand. There are only simple underwriting guidelines and no other savings or investment component involved.
- Ease of Purchase: The buying process is simple and quick thanks to the availability of term insurance products online like Tata AIA Term Insurance by Tata AIA Life Insurance. Furthermore, online tools such as the term plan calculator let you calculate premium prices and look for term policies accordingly.
Selecting the Best Term Plan
While browsing through different types of life insurance, especially term plans, you should carefully consider your family’s future demands and financial condition. You can then choose the one that will protect your family and give you the maximum benefits by considering the following aspects.
- Assess your needs, financial goals and obligation and then pick the plan that will provide the most value for you.
- Choose the right period for your term plan by considering your age and the date you want to retire; the longer, the better.
- Decide which payout option, between lump sum and monthly, is best for you. Your choice will then affect how much your premium will be.
- Before choosing any plan from an insurer, research them by looking at their CSR (claim settlement ratio), solvency ratio, and reputation.
Consider the benefits, budget, and your family’s needs while choosing the term policy from the options offered. Also, choose reputed companies to get the best term plans according to your needs at affordable premiums and higher coverage. You need to evaluate and compare the policies that will benefit them the most. Finally, you must understand the plan’s specifics to buy the best term insurance coverage.