Term insurance is one of the simplest and most pure forms of life insurance. They offer financial security for your family at the lowest possible rates. Term insurance plans help a person secure a large amount of life insurance, or sometimes it is called the sum assured, for a comparatively small amount of money. The nominee is also provided with the benefit amount in case the insured person passes on within the period of the policy.
Features Of Term Insurance
Understanding what term insurance is becomes easier once you know term plans’ features. Here are some unique characteristics of term plans:
- Maturity Benefits – Term insurance protects your family financially in emergencies. It is not an investment tool. So, if you outlive the policy, you will not get a refund. However, it is affordable because it lacks an investment component. All your premiums go towards coverage, not investments. This allows for high coverage at low costs, meeting your family’s needs. If you want maturity benefits, consider term insurance with a return of premium option. These plans refund all premiums after the policy ends.
- Flexibility In Premium Payments – You can pay term plan premiums at your convenience. Options are yearly, semi-annual, quarterly, or monthly. If you have extra money, you can pay a lump sum. Alternatively, you can pay for just a few years. This keeps your insurance active for the term. Single or limited payments are great for self-employed people with variable incomes. They help protect loved ones from unexpected events.
- Life Insurance – A term plan shields your family from financial trouble in emergencies. It offers affordable life insurance. If something bad happens, your loved ones get a guaranteed amount. This support helps them maintain their desired lifestyle without you.
- Add-ons – For a small extra fee, you can enhance your term insurance. Add riders or benefits to expand coverage. Term plans offer various riders, including:
- Critical Illness Rider
- Accidental Death Cover
- Waiver of Premium Benefit in case of a permanent disability
- Tax Advantages – According to the Income Tax Act of 1961 of India, you can claim a deduction of up to Rs. 1. 5000 for deduction on the amount you pay for term insurance policies through 80C of the Act. Also, the payouts are otherwise relieved from tax under Section 10(10D). Also, claiming tax exemptions under Section 80D is possible only if you include a health-related rider while opting for the rider.
How Does Term Insurance Operate?
Term insurance provides essential life coverage by supporting beneficiaries after an unexpected death. Premiums must be paid monthly, semi-annually, annually, or as a lump sum, depending on age, gender, occupation, lifestyle, and health. Secure yourself and your loved ones with instant coverage by buying life insurance online through the Aditya Birla Capital App.
When the policyholder dies, the nominee submits a claim with needed documents, such as a death certificate. After verification, the insurer pays the agreed amount, either as a lump sum or in instalments, or a mix of both. Understanding what is term life insurance and then investing in the right plan brings stability and peace of mind to grieving loved ones.
