Term life insuranceis a type of life insurance plan that offers coverage for a fixed term of period only. Depending upon your requirement, you can choose your policy term, eg: until the time your kids become adult, until you pay off the mortgage on your new home, or fulfill any other financial liability. Also, during this term, if the policyholder dies, a ‘sum assured’ is paid to his/her nominee as a form of a death benefit. There are different type of term insurance plans available on the market, such as Standard Term Insurance Plan, Group Term Insurance Plan, Convertible Term Insurance Plan, etc.
A key feature of term insurance is that it is a purely a life cover plan. There is no savings/profit component involved. Because of this feature, the premium for term insurance plans is much more affordable. If that isn’t reason enough for opting for these plans, below mentioned are 3 factors that make term insurance the most affordable insurance plan for you-
1. No Fees Charged For Fund Management
Unlike your regular insurance plans, term policy does not involve any funds to invest or monitor your money. Therefore, your insurance provider need not worry about maintaining a portfolio for money-management related expenses. As a result, the insurance providers can offer a much more competent premium as compared to your regular life insurance plans.
2. Lower Distribution Costs on Purchase
Because of no added expense involved for fund management, term insurance providers save a lot on their distribution charges for online purchase. Insurance companies also save a lot on the logistic, paperwork and administrative management for term insurance. This, by default, decreases the insurance agent’ commission and fees along with bringing down the premium amount on your insurance plan.
3. Achieve Optimal Sum Assured
The low premiums on term insurance plans offer a chance to obtain optimal ‘sum assured’ for your family’s financial security. A ‘sum assured’ is a fixed amount promised by a term insurance provider to the nominee of a policyholder in case of the untimely demise of the policyholder during the insurance tenure. In the case of traditional insurance plans, if you wish to opt for high sum assured to secure your family’s future, you have to pay a high premium amount. However, in the case of term insurance, you can easily avail a high sum assured at a much lower premium.
Why buying Term Insurance is Important?
Apart from providing affordable premiums, term insurance plans offer several other benefits such as-
- Flexibility in choosing tenure: Since these insurance plans are availed for a fixed tenure only, you can enjoy the flexibility in choosing your insurance tenure.
- Fixed Premium: The premium for your term insurance plan is fixed and is not changed over the entire policy tenure. Thus, knowing this premium amount can help better manage your annual savings and investments, without the concern of any fluctuations in your budget.
- Tax Benefits: The premium paid under a term insurance plan is deductible under Section 80 C of the Income Tax Act. Similarly, the sum assured that is paid to the nominee upon the policyholder’s death is also exempted from tax under Section 10 (10D) of the Income Tax Act.
Term Insurance Plans are ideal for families without a stable source of income or for individuals, who are sole earning members of the family and want to secure the financial future of their family members. Maximum term insurance benefits can be availed if the life insurance policy is taken during the early stage of your career rather than in your old age. For lucrative term insurance options, explore the variety of term insurance plans available in the market today. You can choose from a bouquet of innovative term insurance plans that offer financial stability and security as per the long-term financial needs of a policyholder.