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How can you benefit from term life insurance?

dateKnowledge Centre Team dateMarch 02, 2021 views123 Views
How can you benefit from term life insurance?

Have you ever wondered about your family's survival if any unfortunate mishap happens with you? Do they hold sufficient funds to take care of all the financial burdens that might arise after your demise? If you also get anxious about thinking about all these circumstances, then you must get term life insurance without any further delay. You can easily secure your family's future by getting this policy plan. It will present financial protection to your family in the event of your unfortunate demise.

In the present times, getting a term insurance plan is of absolute value amongst all the kinds of life insurance policies obtainable in the industry. The most beneficial feature of a term insurance policy is that it not only extends a bubble of financial safety to your family but also takes care of their needs and requirements. In case of the unfortunate death of the person who took the term life insurance, the nominees of that person will receive mortality benefits.

What advantages can you get from term life insurance?

If you are the only breadwinner of your family, then it becomes imperative to get a term insurance plan. A term insurance plan can render protection and coverage to your loved ones in case of any unexpected and unfortunate circumstance. This term life insurance can provide monetary assistance to your family after your demise. Hence by choosing a term life insurance, you can secure your family financially that can help them in leading a protected and stable life in your absence.

Here are some of the benefits you will get when you purchase term life insurance:

Complete life cover

One of the important benefits of term life insurance is that it extends complete life cover to the person taking the policy. These complete life cover extend overall protection, and the insured person will receive protection till 99 years of age or more. Term plans can further assist in diminishing the monetary strain on the family members in case of the demise of the insured person.

Huge sum guaranteed with affordable premiums

A term insurance policy is the simplest form of insurance that allows the highest sum assured. Furthermore, the best term insurance plans are the ones that charge the most affordable premium when compared with any other insurance policy. You must always keep in mind that the earlier you purchase term life insurance, the lesser premium it will charge. Hence, it is important to opt for a term plan at an early age to get added advantages like lower premiums.

Severe illness coverage

A person might undergo any severe disease at any phase in their life. Furthermore, the medication costs incurred towards these ailments could simply consume all your savings.

While term life insurance provides life coverage, a person can additionally select a severe illness coverage that is obtainable as an additional rider that can help you pay your medical expenses without fretting about your finances. It is advised to receive this benefit of a term life insurance plan as the future is unexpected, and you might require this illness coverage in the future.

Extra rider benefits

Another advantage of term life insurance is that you can opt for additional rider perks that can further strengthen your term plan. These supplementary rider advantages are easily obtainable and are granted by nearly every insurance firm in India. These rider benefits can be easily supplemented with your policy by paying a minimal extra premium.

Payout of the sum guaranteed

In case of the demise of a policyholder, the family members or the nominees of the assured person can receive a guaranteed lump sum payment to meet all their financial obligations. The nominees further hold the option of receiving the payment either in a lump sum or in fixed monthly installments. These guaranteed payouts will assist the family members in taking care of their financial needs in a manageable way.

Return of premium alternative

A term insurance policy does not render any maturity advantage. However, you can get a maturity advantage within the same policy if you have chosen a return of premium alternative. In this alternative, you are required to pay a slightly higher premium that will be delivered to you if you outlive the policy maturity period. However, the price of the premium granted will not include any rider benefits or taxes.

Hence, looking at the amount of premium and also the premium alternative is essential while you opt for term life insurance. You can further utilize an online term insurance calculator and get an impression of the premium amount with and without the maturity bonuses that will assist you in making a smart choice.

Various mortality benefit payouts

You hold multiple liabilities and burdens like paying bills, EMI's, and many more if you are the sole earning member in your family. So when something happens to you as an unfortunate demise, then all this burden gets shifted towards your family. This is where term life insurance can be of utmost benefit.

It will play a significant role in uplifting the financial conditions of your family by providing them with either a lump sum payout or payouts in monthly installments so that they can manage all their money-related problems easily. The family further holds the alternative to receive payments each month along with the lump sum amount.

Income tax advantages

A term insurance policy further extends tax advantages falling under two different sections of the Income Tax Act. A person can get a tax benefit for the term life insurance policy premium paid under section 80C of the Income Tax Act, 1961. However, the amount of the paid premium shall not exceed Rs 1.5 lakhs. Furthermore, a maturity advantage in regards to Term Return of Premium (TROP) also gets exempted in certain term insurance policies under Section 10 (10D) of the Income Tax Act.

Maturity advantages

A conventional term life insurance policy solely extends mortality benefits to the person who took the policy as insurance coverage, and there are zero benefits offered on the maturity of the term plan. However, nowadays, there are certain plans like a term Return of Premium (TROP) that renders multiple maturity advantages paid in the form of premium if the person who took the policy outlives the term period.

Accidental mortality benefit

This Accidental Mortality Benefit holds utmost significance because in case the insured person passes away due to an unfortunate accident, the family gets a doubled amount than what they would have got in case of the natural death. This is so because the insurance companies understand that a sudden unfortunate incident can shuffle the entire life of the insured person and so his family.

Furthermore, the cost of medical treatments is also exorbitant if the person survives in the accident. Thus, they contemplate that this huge sum of money can help in lessening the financial burden of the family.

Selecting the best term life insurance for your family?

The selection of your term life insurance plan should be based on a careful analysis of your current financial situation and the future needs of your family. Therefore, you need to factor in your goals and that of your family when considering several term life insurance plans.

There are numerous term plans available in the market that can be tailored as per your specification, and the best term life insurance will provide you with all the benefits that are mentioned above. Hence, you must opt for a plan that protects your family in the most suitable manner and the policy that renders the highest return on your invested amount. Here are four term insurance factors that can help you select the best term plan for your family.

  • Cover: Determine your needs (age, finances, liabilities, etc.) and choose the right cover that can benefit you the most.
  • Period: Based on your age and when you plan to retire, choose the appropriate policy period; the longer, the better.
  • Payout: Select the right payout option (among lump sum and monthly), which can then decide your premium amount.
  • Insurer: Study the insurer by checking their CSR (claim settlement ratio), solvency ratio, and reputation before choosing any plan from them.

While determining the best term plan among the choices provided to you, you must always have a look at the benefits they render. You must also assess the requirements of your family and compare which policy can give them the utmost benefit. Take your financial liabilities into consideration, as well. If you hold more liabilities, then you can take additional rider alternatives and pick the coverage amount that you would need the most. To purchase the best term insurance policy, it is essential that you are well-versed with the details of the term plan.

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