Term insurance is a kind of life insurance that offers coverage for a specific period or "term" of years. In the event of the demise of the insured during the specified period when the plan is active, a death benefit is paid to the beneficiary. It's a good idea to buy a term plan to provide your loved ones with financial security in case of your unfortunate death. Here are the top reasons to opt for term insurance.
Affordable Premiums Term insurance costs much less than whole life insurance. That's because it is not meant to last through the policyholder's old age. You can receive a high-value cover by paying quite affordable premiums. The earlier you purchase a term plan, the lower the premium amount to be paid. You can pay the premiums monthly, bi-annually or annually based on your convenience. Payout of the Sum Insured If the policyholder dies while the policy is active, the family gets the sum assured as a payout. The insured can choose it to be an income that's paid yearly or monthly, a lumpsum payout, a combination of both or a rising income at the inception. This can help you have enough money at hand for other financial needs and regular expenses. Critical Illness Coverage If an optional cover for critical illnesses is a part of your term plan, you can receive a lumpsum payout once you are diagnosed with a disease covered in the policy. Accidental Death Benefit This is a cash benefit paid out for the policyholder's accidental death. You can add it to your term insurance to avail protection against any misfortunes in the future. Tax Benefits According to the Income Tax Act, you can enjoy tax benefits on premiums paid to critical illness benefit under Section 80D and on premiums paid to the term plan under Section 80C. The lumpsum amount that a nominee gets as the death benefit or sum assured is also exempt from taxation under Section 10 (10D). No Brokerage A brokerage fee is often specified under the premium allocation charges. It is usually a recurring expense. Each time you pay a premium, a particular percentage of it is allocated toward the brokerage fee. With time, this percentage keeps diminishing. Generally, the percentage varies from 5% to 6% of the net premium amount. If you purchase term insurance online, you need not pay any brokerage charges at all. Thus, you can save up to 6% of your hard-earned money that would be spent towards brokerage if you would have bought the plan offline. Boost Savings If you buy a term plan with the return of premiums, the overall premiums (excluding any extra premiums and taxes) are paid back if you survive until the plan matures. At maturity, the percentage of the return of premiums could range from 110% to 125% depending on your chosen option. Look for a term policy with additional benefits like enhanced life coverage if you survive till the plan's maturity and rebates for a high sum assured. These perks are offered by a reputed insurance provider in India.
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