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Term Insurance Benefits

Find out more about the various benefits of buying a term insurance plan

#Term-Insurance
2:41 min read

Term insurance helps you secure your family financially in case you are not around. Term insurance plans are considered to be one of the most important types of life insurance plans that one should buy in today’s time. Term insurance not only provides financial protection to your family in the most unfortunate events but also provides you tax benefits. Not only this, you can avail various other benefits available with term plans. Check these term insurance benefits below.

What are the Benefits of Term Insurance?

Following is a list of benefits that a term insurance policy can provide you:

  • High Sum Assured at Affordable Premium
  • Easy to Understand
  • Multiple Death Benefit Payout Options
  • Additional Riders
  • Income Tax Benefits
  • Critical Illness Coverage
  • Accidental Death Benefit Coverage
  • Return of Premium Option


Let’s talk about the term insurance benefits stated above in detail.

1. High Sum Assured at Affordable Premium

A term insurance plan is a simple form of life insurance. One of the primary term insurance benefits is its affordable cost. As compared to other life insurance policies, a term insurance plan is available at a premium that you can easily afford. Another important term insurance benefit is that the earlier you buy term insurance, the lower will be the premium. 

Furthermore, the premium while buying term insurance online may be lower than buying it offline. In other words, the cost-saving that happens at the insurer’s end is transferred to you as one of the benefits of term insurance plan. You can even check the term insurance benefits online quickly.  

Term Plan Calculator
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2. Easy to Understand

While buying a life cover, you may find it difficult to understand the insurance-specific terms about various life insurance policies. One of the prime features of term insurance plans is that they are quite easy to understand. 

As a pure life cover, a term insurance plan does not have an investment component in it. You pay the premiums, and the insurer covers your life for a fixed duration to offer the term insurance benefits. 

3. Multiple Death Benefit Payout Options

You may be paying the EMIs of your new home, car, or a personal loan you have borrowed. In your absence, your financial liabilities may fall on your family members. It is where the various payout options of term insurance policy play a vital role.

Your dependents may get a lump sum amount in case of your unfortunate demise and this lumpsum will help them to manage the aforesaid financial liabilities.

Some term insurance policies also give you the option to receive a monthly income along with the lump sum amount as the death benefit. With this monthly income, your family may find it easier to manage the regular expenses. 

4. Additional Riders to Strengthen the Policy

Term insurance plans come with riders that you can choose to enhance the basic term insurance benefits. You can add these riders to your term insurance plan by paying a nominal additional premium.

For example, the Max Life Waiver of Premium Plus Rider [UIN: 104B029V03] from Max Life Insurance provides you waiver of all future premiums in case of dismemberment and in case you are diagnosed with the any of the specified critical illness [1]. This means your life cover will continue even when you are not able to pay the premiums for your policy.

5. Income Tax Benefits

Term insurance plan with critical illness cover

2. Easy to Understand

While buying a life cover, you may find it difficult to understand the insurance-specific terms about various life insurance policies. One of the prime features of term insurance plans is that they are quite easy to understand. 

As a pure life cover, a term insurance plan does not have an investment component in it. You pay the premiums, and the insurer covers your life for a fixed duration to offer the term insurance benefits. 

3. Multiple Death Benefit Payout Options

You may be paying the EMIs of your new home, car, or a personal loan you have borrowed. In your absence, your financial liabilities may fall on your family members. It is where the various payout options of term insurance policy play a vital role.

Your dependents may get a lump sum amount in case of your unfortunate demise and this lumpsum will help them to manage the aforesaid financial liabilities.

Some term insurance policies also give you the option to receive a monthly income along with the lump sum amount as the death benefit. With this monthly income, your family may find it easier to manage the regular expenses. 

4. Additional Riders to Strengthen the Policy

Term insurance plans come with riders that you can choose to enhance the basic term insurance benefits. You can add these riders to your term insurance plan by paying a nominal additional premium.

For example, the Max Life Waiver of Premium Plus Rider [UIN: 104B029V03] from Max Life Insurance provides you waiver of all future premiums in case of dismemberment and in case you are diagnosed with the any of the specified critical illness [1]. This means your life cover will continue even when you are not able to pay the premiums for your policy.

5. Income Tax Benefits

Term insurance plan with critical illness cover

Term insurance plans also provide tax benefits. While the premium you pay for a term insurance plan is tax-deductible, the payouts also come with tax exemptions as per the existing tax laws.

Also Read: Term Insurance Tax Benefits

Term Insurance Benefits under Section 80C 

Under Section 80C of the Income Tax Act 1961, the premium you pay to buy a term insurance plan is exempt, up to a limit of Rs.1.5 Lakh in a year. You can get maximum term insurance tax benefits under this section by purchasing the plan for the maximum coverage offered to you based on your age and health.

Term Insurance Benefits Under Section 10(10D)

The death benefit of term insurance plans is fully exempt as per the provisions of Section 10(10D) of Income Tax Act 1961.

6. Critical Illness Coverage

You may suffer from critical illnesses during any phase of life and getting the necessary treatment can drain all your savings. Although the primary benefits of term insurance plans only offer life cover, you can choose to get critical illness coverage via opting for add-ons/ riders.

Max Life Insurance offers critical illness rider with its two variants of term insurance plans - Max Life Online Term Plan Plus  (UIN: 104N092V04, Non-Linked Non-Participating Individual Pure Risk Premium Life Insurance Plan) and Max Life Smart Term Plan (UIN: 104N113V03, Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan). Under the Critical Illness cover, you will get a lump sum in case you are diagnosed with the critical illnesses covered under the policy. 

With this cover, you can pay for the necessary treatment without consuming up your savings.

Term insurance plan with critical illness cover

6. Critical Illness Coverage

You may suffer from critical illnesses during any phase of life and getting the necessary treatment can drain all your savings. Although the primary benefits of term insurance plans only offer life cover, you can choose to get critical illness coverage via opting for add-ons/ riders.

Max Life Insurance offers critical illness rider with its two variants of term insurance plans - Max Life Online Term Plan Plus  (UIN: 104N092V04, Non-Linked Non-Participating Individual Pure Risk Premium Life Insurance Plan) and Max Life Smart Term Plan (UIN: 104N113V03, Non Linked Non Participating Individual Pure Risk Premium Life Insurance Plan). Under the Critical Illness cover, you will get a lump sum in case you are diagnosed with the critical illnesses covered under the policy. 

 

With this cover, you can pay for the necessary treatment without consuming up your savings. 

Term insurance plan with critical illness cover

7. Accidental Death Benefit Coverage

Accidents can happen at any time and may lead to death or dismemberment. So, you can add an additional cover using Max Life Accidental Death and Dismemberment Rider (UIN: 104B027V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider). 

Max Life Accidental Death and Dismemberment Rider (UIN: 104B027V03; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider) from Max Life Insurance safeguards the financial future of your family in case of accidental death or dismemberment. You can add this rider to your term insurance policy to provide additional term insurance benefits or cover in case of accident leading to death or dismemberment. [2] The sum assured is payable to the beneficiary in a lump sum as per the contract as the benefits of term insurance policy. You can add the Max Life Accidental Death and Dismemberment Rider at any point of time, provided that the remaining policy term of the base policy is at least 5 years.

To get the benefits of term insurance plan with accidental death rider, you can add this rider while buying the policy or post-purchase as well. Also, you must understand the coverage benefits of various riders before you include them in a term insurance plan. 

8. Return of Premium Option

A pure term insurance plan only provides life cover to the beneficiary in the event of life insured’s untimely demise. It does not provide any benefit on maturity. However, you can get maturity benefit under term insurance plan if you opt for return of premium option. This option will require you to pay higher premiums but will return you the total premiums paid by you if you survive the policy tenure. But, the total premium amount to be returned will not include any taxes, levies, rider premium and modal amount paid on the premium.

These days, you can easily use an online term plan calculator to estimate the premium of a term insurance plan with or without maturity benefits. It will help you make a prudent decision based on your financial needs.  

Why Choose a Term Insurance Plan?

You may believe nothing uncertain will happen to you based on the lifestyle you follow. However, there is always a risk of untimely demise through external factors, like accident or disease etc. which are not under your control. Buying term insurance plan is essential as it helps your family to minimize the financial stress that they might have to face in your absence.  

Approximate Premium of Max Life Term Insurance Plan at Different Ages

 

     Premium (Per Annum) for Life Cover of Rs. 50,00,000 for a Non-Smoker, Male*

Age**

Max Life Online Term Plan Plus

Max Life Online Term Plan Plus with Return of Premium

25

Rs. 4,130

Rs. 7,838

30

Rs. 4,720

Rs. 9,614

35

Rs. 5,723

Rs. 12,906

40

Rs. 7,198

Rs. 19,072


*The calculation of the premium above is based on the certain assumptions. Premium amount stated is inclusive of GST and payable annually till the age of 60. Life cover of 50 years is also till 60 years of age. Annual income is taken as <5 lakh.

**Age as on 1st January, 2020. 

Choosing Right Term Insurance Plan is Crucial

You may find a wide variety of term insurance plans available in the market with various benefits. However, it would be good if you do not follow a one-size-fits-all approach while considering the term insurance benefits. 

You should take adequate life cover based on your financial liabilities and select appropriate add-ons basis the kind of coverage you are seeking. Keep in mind that you know and understand various facets related to buying term insurance plans online or offline before you buy one.

Term insurance plan with critical illness cover

Choosing Right Term Insurance Plan is Crucial

You may find a wide variety of term insurance plans available in the market with various benefits. However, it would be good if you do not follow a one-size-fits-all approach while considering the term insurance benefits. 

You should take adequate life cover based on your financial liabilities and select appropriate add-ons basis the kind of coverage you are seeking. Keep in mind that you know and understand various facets related to buying term insurance plans online or offline before you buy one.

 

Term insurance plan with critical illness cover

Also Read: Things to Consider Before Buying Term Insurance Policy

As a rule of thumb, buy term insurance plan with the cover that is at least eight to ten times your annual income. For example, if you currently earn Rs. 5 lakh in a year, then you should select a life cover of around Rs 40 – 50 lakh or more to get maximum benefits of term insurance plan.  

To calculate term insurance premium for yourself, use our term insurance calculators online. 

Sources:

[1]https://www.sec.gov/Archives/edgar/data/917677/000091767701500003/apm_wsp.htm

[2]https://www.maxlifeinsurance.com/content/dam/corporate/Riders/Max-Life-Accidental-Death-and-Dismemberment/accidental-death-and-dismemberment-rider.pdf

ARN:- Oct/Bg/28E

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