Term insurance is a kind of insurance policy that provides financial security to an insured person’s loved ones in the unfortunate event of the individual’s death. It is a cover you can opt for a specific term, which is why it’s called term insurance.
If you are looking to get yourself a term insurance policy, you should keep in mind that there is no maturity benefit. Term insurance is therefore called a pure protection plan. However, if you opt for one of the term insurance riders, you will be able to ensure more benefits. Riders are add-ons that add value to your insurance policy.
Term insurance comes with many advantages. One of them is the simplicity -- there are no complex calculations. Till the time you pay your premium, the term insurance policy exists and if you stop paying your premiums, it ceases to exist. Another advantage is affordability. Term insurance premium is typically lower than other insurance covers, for example a whole life policy. If you are a young person who is starting your career and want to protect your loved ones, term insurance works just fine for you. There is another big advantage, in the form of term insurance tax benefits.
You can avail term insurance tax benefits on the premium you pay for your policy. You can claim up to Rs 1.5 lakh tax benefit or deduction every financial year for the premium you have paid for yourself, family, children and spouse. This benefit can be claimed under Section 80C of the Income Tax Act 1961.
As already mentioned, term insurance riders ensure that you and your loved ones can claim more benefits. There are two kinds of covers that offer accidental benefits. These include accidental death benefit and accidental total and permanent disability benefit.
Accidental death benefit is the payment made to the nominee along with the standard benefit that is made out in the unforeseen event of the insured person’s death. If you are someone who needs to do a lot of driving owing to your profession, you could choose this rider to ensure your dependents or nominee benefits from the extra amount. The amount can be paid out as a lump sum or monthly income, depending on the policyholder’s choice and the options provided by the insurer.
There is another way accidental benefits can be claimed. This is by way of the accidental total and permanent disability benefit. This is an important rider as it covers those who are permanently disabled because of an accident. An insured person is considered to have total and permanent disability if they are physically unable to be employed in any kind of work. When an insured person is disabled because of an accident, an income is offered to the insured for a specific term, as per the policy terms. This income can be claimed as a lump sum amount as well.
Also Read - Short term vs Long term Disability Insurance
Choosing one of these options is particularly important if your family is dependent on you for their financial needs. When you choose a rider, make sure you pick one that is most relevant to your financial situation, and the life stage you are in. Premiums paid towards health-related riders qualify for term insurance tax benefits as per Section 80D while riders that offer accidental benefits qualify for tax deductions under Section 80C of the IT Act. So, if you pay a premium for your accidental death benefit rider or accidental total and permanent disability benefit, it comes with tax benefits.
Riders such as accident-related benefits work as a protection from the uncertainties that life throws at you. Plan well and take into account the vulnerabilities of your loved ones before you choose the right rider along with your term insurance policy. Opt for the iSelect Smart360 Term Plan, available on the Canara HSBC Life Insurance portal, and you can choose additional inbuilt coverages like accidental death benefit and accidental total and permanent disability benefit. You could also choose the child support benefit, and also add your spouse in the same policy at a discounted rate. You can increase your life cover as and when you have new needs -- protect your loved ones from life’s uncertainties.