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Benefits of Limited Premium Payment Term Insurance Plans

Benefits of Limited Premium Payment Term Insurance Plans

Limited Pay term Plan

Term life insurance plans offer considerable amount of coverage at low premium rates as compared to other types of life insurance plans, making an important addition to your financial portfolio. A term plan is a valuable investment in the financial security for your loved ones, when you are not present. The plan pays the sum assured in case of your premature death during the policy tenure. It enables your family to meet their day-to-day expenses as well as save for future financial liabilities, with the death benefit received under the plan. It is obvious that higher the sum assured of your term insurance plan, higher is the death benefit received and therefore, the level of financial security for your family.

What is Limited Premium Payment Term Insurance?

As consumers demand products and services that solve their individual purpose, service providers are providing more options that are customized to their needs and the insurance sector is no exception. Everyone looking to buy an insurance policy now have the option to choose premiums, term, features, and coverage as per their custom requirements. One such plan, popularly known to be structured to suit the preferences of the insurer, is a limited pay term plan.

Limited pay insurance plans give you the benefit of paying insurance premiums for a limited period of time, while ensuring you are covered for an extended period, even when you stop paying your regular premiums. For short, it gives you the advantage of limited premiums and a continuous cover. For instance, you buy limited term insurance for a term of 25 years, with premium to be paid for only 10 years, then you will have to pay the premium for 10 years but the cover will be extend up to 25 years, while you don’t pay anything for the remaining 15 years.

Benefits of Limited Pay term Plan

What are the Advantages of Limited Pay Term Insurance Plans?

A limited premium payment plan librates you from the financial burden of paying premiums for longer durations. With this term plan option you can choose longer coverage durations which continue even after you retire, so you know that you wouldn't have to pay the premiums after retirement. As you can opt for higher coverage tenures, you can also enjoy longer risk coverage and the plan becomes more relevant.

1. Premium payments end within a short period

The primary benefit of limited pay option is that it frees you from paying premiums for your term insurance plan for a long period. You only have to pay the premiums for a limited, pre-decided tenure while your plan keeps running for longer. Thus, if planned right, limited premium plans can help you pay off your premiums within your active working life before you retire in peace.

2. Reduces the chances of policy lapse

Since the premiums are payable for a limited duration, you don't have to make the efforts of paying the premiums on time for a longer period. The premiums are paid off within a shorter duration, and the possibility of your policy lapsing reduces. And one the premiums end, you can enjoy uninterrupted coverage under the plan without the risk of a lapse.

3. Better tax benefits if Sec 80C limit not fully used

It is understandable that when you pay premiums for a limited period, the annual premium outgo increases. As the premium cost are all paid within a short period of time, limited premium plans have higher annual premiums than regular plans. This higher premium lets you maximize the deduction available under Section 80C of the Income Tax Act, which allows deductions up to Rs 1.5 lakhs from gross total income. However, you can claim the maximum possible deduction under this section only if this limit is not already reached by other tax saving expenditures and investments you have made.

4. Suitable for individuals with a short career span

Owing to the current work culture and freelance work practices, there are several individuals who have a short career span or expect to earn only for a short period of time. These individuals may not be comfortable with long term premium commitments of a regular premium plan; therefore limited premium payment is a great option worth considering. It will free them from long-term premium payment obligations and ensure they are covered for longer even when their incomes are unstable or limited.

A limited pay term plan owes its popularity to the flexibility and customization it offers to the insured. If you are looking to buy a sound term insurance plan that gives you several benefits at nominal premium rates, then the iSelect+ Term Plan by Canara HSBC OBC Life Insurance can be the thing for you. You can easily customize the plan as per your need, so that your coverage lasts for a longer time.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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