Term Insurance Plans

What Is Term Insurance Plan
Term insurance is the simplest and one of the most affordable types of life insurance plans. Term insurance provides financial protection in the event of the sudden demise of the policyholder. If you take a detailed look at what is term insurance, it is a formal agreement between the insurer and the policyholder that guarantees a pre-decided amount to the nominee of the policyholder in the event of his/her death. The policyholder has to pay the premiums without fail to keep the term insurance plan active.
Along with financially securing the policyholder's family, term insurance plans can also be used to fulfil the future needs of the children like education and marriage. Some term insurance plans offer optional coverage for critical illness and partial or complete disability as these can disrupt the regular income of the life assured. It is important to understand how term insurance plans work. Term insurance doesn't offer maturity benefits and the plan ceases to exist after the expiry of policy term.

Why You Should Buy Term Insurance
Takes Care Of Responsibilities
The risk to your life makes your family vulnerable. Being an earning member, any unforeseen incident can disrupt the financial stability of your family.
A term insurance plan ensures that your family does not have to compromise with their lifestyle in your absence. The payout from a term plan can be used to meet the monthly expenses of the household.
The sum assured can also be utilized to fulfil the crucial life goals of your children like schooling and higher education.

Protects Assets
The comforts of the modern world may often lead to an accumulation of debt. Home loan, car loan or other forms of debt are easily serviceable but can turn into a liability for your family if you are not around.
Delay in the payment of instalments could lead to a loss of assets. With term insurance, you can live a stress-free life and have peace of mind with the knowledge that your family will be able to protect the assets even in your absence. The sum assured guaranteed by term insurance plans could be used to pay off the debt or make timely payments to service it.

Mitigates Lifestyle Risks
Sedentary lifestyle, stress, consumption of unhealthy food and other lifestyle changes have led to a rise in the instances of various diseases and ailments that were not so common earlier. Besides being life-threatening, lifestyle diseases can take a heavy toll on your pocket. Along with death benefit, term insurance plans also offer protection against critical illnesses.
The policyholder is paid a pre-decided sum on the diagnosis of a critical illness.

Term Insurance Benefits
1- Affordable
Term insurance is one of the most affordable life covers available in the market. It ensures high coverage at low term insurance premiums. A term insurance plan doesn't have any investment component and the entire premium goes into providing life cover. The simple structure of the term insurance results into a high cover at a relatively lower premium.

2- Return Of Premium Option
Term insurance doesn't have maturity benefits and only pays on the death of the policyholder. Some term insurance plans, however, return the premium at the end of the policy term. Investors of term insurance with return of premiums get back the premiums paid during the policy term at the end of the tenure as per the conditions mentioned under the product. The amount can be used to achieve life goals like buying a car, dream home or provide for child's education. One of the term insurance benefits is that you get life cover for the entire policy term and get back the premiums paid at the end of the policy term.

3- Flexibility In Premium Payment
Paying all the premiums on time is a prerequisite to keep a term insurance plan active. The premiums have to be paid without fail but insurance companies offer ample flexibility in the payment frequency of term insurance premiums. The premiums can be paid on a monthly, quarterly, half-yearly or annual basis as per the product terms and conditions. Term insurance benefits include the option to pay premiums for a limited period as per the product terms and conditions. Limited premium payment term plans offer the option to pay the premiums for a limited period but the coverage continues for a longer period.

4- Death Benefit
Term insurance plans are flexible products and policyholders can choose from multiple options to receive the death benefit . Typically, term insurance plans pay the sum assured as a lump-sum amount, but many plans offer the option to receive the sum assured in instalments. The loss of an earning member can disturb the monthly income inflow. The instalment option can be used for income replacement. It helps the family take care of the daily expenses, protect assets and achieve life goals.

5- Flexible Policy Terms
The insurance needs of people vary with occupation, family, liabilities and life goals. Term insurance plans provide protection for a specified term. Some people require cover for a longer period while some need for a shorter duration. Term insurance offers complete flexibility in the tenure of the policy.

6- Pays Off Liabilities
Achieving life goals could lead to the accumulation of liabilities over a period. For instance, a major life goal such as buying a house on loan can lead to the addition of long-term liability. The repayment tenure of a home loan can stretch to over 25 years. In the event of an unfortunate incident, your family may be stranded with a heavy liability burden. Term insurance plans can help your family pay off all the liabilities with ease and lead a life of dignity. The probability of failure to pay off the liabilities seldom comes to the mind while taking a fresh loan, but it is crucial to protect your family through a term insurance plan. Hence it is wise to plan your cover in a manner that all liabilities are taken care of and your loved ones are secure in your absence.

7- Online Availability
With the advent of the internet, a number of products and services have been digitized. Accessing online or buying a financial product through the internet substantially increases the convenience for the customers. In a few clicks, you can buy an online term insurance plan and pay your premium from the comfort of your home. Renewing a term plan has also become extremely convenient and easy. Along with buying a new plan, you can also renew your existing plan online. Primary aim of an online term policy is convenience and affordability. Online term plans are usually cheaper as they do not have any commission costs included. 8

8- Tax Benefits
Even though the primary aim of buying a term insurance plan is to protect the financial future of your family, it also provides certain tax benefits. Term insurance tax benefits range from a tax deduction for the premiums paid to tax exemption on the sum assured. The premiums paid for term insurance plans are eligible for a tax deduction of up to Rs 1.5 lakh in a year under Section 80C of the Income Tax Act, 1961, subject to provisions stated therein. Additionally, any amount received through the policy maturity, surrender or on the death of the life assured is tax-exempt under Section 10 (10D) of the Income Tax Act, subject to provisions stated therein.

9- Critical Illness Cover
Term insurance plans generally come with optional riders that provide additional cover for certain incidents at a nominal extra cost. One of the term insurance rider benefits is the optional coverage for critical illnesses. With the rising cost of medical care, the treatment of serious diseases can take a heavy toll on the pocket. The critical illness cover pays a lump-sum amount on the diagnosis of illnesses like heart, kidney, liver and such other diseases as mentioned under rider terms and conditions. The amount received through such a rider cover can be used for various diseases-related expenses. It acts as an income replacement tool as critical illnesses can lead to a temporary or permanent loss of livelihood.

10- Disability Cover
Many term insurance plans offer an optional cover for partial or total disability. A disability can disrupt the normal course of life and could lead to a loss of income, which can make paying term insurance premiums difficult for policyholders. The disability rider ensures that the insurance cover for the specific rider is paid in lumpsum to the policy holder during a contingency.