Imagine you have worked hard, built a life, and created memories with those you cherish most. But life, as we know, is unpredictable. While we cannot foresee what lies ahead, we can take steps to protect our loved ones from financial hardship when we're no longer there to support them.

Term life insurance is more than just a policy; it is a promise to secure your family's well-being. It's the peace of mind that, no matter what happens, they will have a financial cushion to rely on, covering everything from daily expenses to future aspirations.

Let's learn about term insurance and how it can financially secure your loved ones, giving you peace of mind knowing they're protected.

What is Term Insurance?

Term insurance is a type of insurance that lasts for a specific period, like 10, 20, or 30 years, unlike whole life insurance, which provides coverage for your entire life. With term insurance, you're only covered for a set time, while whole life insurance offers protection as long as you live and also builds cash value over time.

If the policyholder passes away during this term, their beneficiaries receive a payment, called “death benefit”. It is often more affordable than permanent life insurance and is designed for those who want to ensure their loved ones are financially protected for a certain period, such as during the years they have dependents or a mortgage. After the term ends, the coverage stops unless you renew it.

Types of Term Life Insurance

• Regular Term Insurance

• Term Plan with Return of Premium

• Increasing Term Life Insurance Plans

• Decreasing Term Life Insurance Plans

Regular Term Insurance

It is term life insurance that covers you for a specific period, like 10, 20, or 30 years. You pay a set amount each month or year. If something happens to you during this time, your family gets a death payment. However, it doesn't build any cash value, and if you outlive the term, the insurance ends without any return of the money you paid.

Term Plan with Return of Premium

A Term Plan with Return of Premium (TROP) is a type of life insurance that works like regular term insurance but with one key difference. If you survive the term of the policy, you get back the premiums you paid over the years.

So, if you choose a 20-year plan, for example, and live through the 20 years, the money you paid for the insurance is returned to you. However, the premiums for this type of plan are usually higher than a regular term plan because of the added benefit.

Increasing Term Life Insurance Plans

It is a type of term life insurance where the coverage amount (death benefit) increases over time. This means that as the years go by, the amount your family would receive if something happens to you gets higher. The increase is usually done in fixed amounts or as a percentage each year. This type of insurance is often chosen to keep up with inflation or to provide extra protection as your needs grow, but the premiums also increase over time as the coverage goes up.

Decreasing Term Life Insurance Plans

Decreasing Term Life Insurance is a policy where the coverage amount (death benefit) reduces over time. As the years go by, the amount your beneficiaries would receive if something happens to you becomes smaller.

This type of insurance is often used to cover specific financial responsibilities, like a mortgage, where the amount owed decreases over time. The premiums usually stay the same, making it more affordable than other types of term life insurance.

Things you should know about term plan

1. Fits into your budget.

2. Gives you a longer cover.

3. Offers 4 payout options.

4. You can choose from four payout options based on your needs:

• Lump Sum: The entire life cover amount is paid as a lump sum.

• Income: A regular monthly income for 10 years, with a lower premium.

• Increasing Income: Monthly income increases by 10% every year for 10 years.

• Lump Sum plus Income: A mix of lump sum and monthly income for your nominees.

5. Pays life cover on terminal illnesses (including AIDS).

6. Provides you the option to buy online with Married Women's Property Act (MWP Act).

Can you avail of tax benefits with this plan?

Yes, term life insurance provides three types of tax benefits:

• Premiums paid are tax-free under Section 80C.

• You can get additional tax benefits under Section 80D if you opt for the Critical Illness benefit.

• The claim amount received by you or your nominee is not taxable under Section 10(10D).

Conclusion

Term life insurance is a reliable option to protect your loved ones' financial well-being. With budget-friendly premiums, customizable payout options, and tax benefits, it offers peace of mind. Protect your family's future today, knowing they will be supported, no matter what.