If you think term insurance is a ‘waste of money’, think again…
Do any of these sentences sound familiar?
1. Insurance is too complex for me
2. I am too young to buy an insurance policy
3. What’s going to happen to me? I am hale and hearty!
4. I am always here for my family…
5. Health science is pretty advanced, people live much longer
If yes, then you need to consider the case of Rohit and Jyoti.
My colleague told me that she was investing in a term policy. I could not understand the need for it. She said, "Just like you, I too did not care for life insurance earlier. However, I saw death very closely in my family. Rohit, my brother-in-law passed away in a car accident. He was 48. This left my sister Jyoti in an emotional shock and financial disorder.
Luckily, Rohit had taken a term insurance plan at the age of 37. He had chosen a life cover of Rs. 50 lakhs and a policy term of 30 years. He even had an accident benefit rider. Jyoti received the amount within ten days. This helped her manage daily expenses as well as save for the bigger goals like her child’s education and marriage.”
After this conversation, my perception of life insurance changed. I read online to learn the benefits of term insurance. I now acknowledge that anybody can face a crisis in life. You should always plan a financial backup for your loved ones such as parents, spouse, siblings, and children.
A term insurance policy allows you to do just that. The proceeds from the term plan will allow your family/ dependents to maintain their lifestyle, meet their financial goals, and pay off liabilities in case of your early demise. You can even opt for various riders available with term insurance to enhance its applicability. The first step to purchasing term insurance is knowing the benefits.
So, what are the Key Benefits of Term Life Insurance?
1. Term Insurance offers high life covers at lower premiums
One of the major benefits of term insurance is its low cost, particularly if you buy online. When a policy is bought online, the benefit of cost saving is transferred to the customer. For example, Max Life’s Online Term Plan Plus offers a 28-year-old, non-smoker a life cover of Rs. 1 crore for a premium of just Rs. 563 per month.
Additionally, the premiums are lower when you buy it at a young age. Thus, the earlier you buy a term policy, the lower the premiums.
2. Simplicity of Term Plans
Understanding term insurance is easy. It is a pure life cover. This means that there is no investment component. One needs to simply pay premiums against which the insurer covers the life risk of the policyholder for a fixed duration. A term insurance policy can be bought through an advisor or directly online.
3. Tax Benefits of Term Insurance
Tax savings should not be the main reason to purchase a term policy; nevertheless, both the premiums as well as the payouts offer tax benefits and exemptions respectively as per prevailing tax laws.
Benefits under Section 80C
Life insurance premiums up to Rs. 1.5 lakh per annum are exempt as per section 80C of the Indian Income Tax Act subject to fulfillment of certain conditions specified. This is also available for the life insurance premiums paid for your spouse and/or children.
Benefits under Section 10 (10D)
Term insurance plans offer a certain payout on the maturity and/or death of the policyholder. The maturity amount, or the death benefit, is fully exempt under the provisions of 10 (10D) of the Income Tax Act 1961.
However such cases are rarely found in term insurance plans.
4. Death Benefit Options
While term policies provide a lump sum maturity amount, you can get plans that combine lump sum and monthly incomes, and also those with an option of a lump sum with increasing monthly income. This helps your family manage regular expenses and also manage the inflation impact.
5. Riders of Term Policy
Term insurance policies come with optional riders that enhance the benefits of a basic term insurance plan on the addition of a nominal premium. For example, opting for a Waiver of Premium (WoP) rider allows the life assured to stop paying premiums if he or she suffers from critical illness or dismemberment. The policy will not lapse and the cover continues. Accident benefit rider and critical illness rider are other popular term insurance riders.
Read more to learn about the Max Life Online Term Plan Plus and its various benefits and riders.
Disclaimer: Life Insurance coverage is available in this product. Max Life Online Term Plan Plus is a Non-Linked Non-Participating Individual Pure Risk Life Insurance Plan (UIN - 104N092V04). It provides only a death benefit and no maturity or surrender benefit. For more details on the risk factors, terms and conditions, please read the product sales prospectus carefully before concluding a sale.