The primary benefit of term insurance plans is that they can serve as your family’s financial security net in the event of your sudden demise. Given the fact that the term insurance plans mostly do not offer any survival benefits, i.e., there are no insurance payouts if you survive the policy coverage period, many people think that these plans are only beneficial for those with family or dependents.
This is not entirely true – there are various features and benefits of term insurance plans that benefit you as the policy buyer throughout the coverage period and onwards. Let us take a look at different benefits of term insurance plans and how they benefit each member of the family –
Financial Protection for Life
Term insurance plans are the most reasonably priced insurance variant to secure your family against life’s contingencies. The premium payable under a term plan varies with age. The sooner you purchase a term plan, the more extended coverage you can opt for, in terms of the Sum Assured and the number of years. For example, an individual in their 20s and 30s can opt for a higher term cover (at lower premium payable) and policy coverage tenure than those in their 40s and onwards.
While a basic term insurance plan does not offer any maturity benefits, you can avail of maturity benefits with a term plan with a return of premium (TROP). Under TROP, you are eligible to receive the total amount of annualized premiums upon the completion of the policy period. This way, you have a significant amount of money that you can use towards securing your life post-retirement.
Term insurance plans also provide comprehensive tax-saving benefits on both premium paid towards the plan and the insurance benefit received by your family. First, the premium paid towards the term insurance plan is eligible for tax-deduction under Section 80C of the Income Tax Act 1961. Thus, you can claim tax deductions on premium amounts up to Rs 1.5 lakhs in a financial year under the Section. Moreover, the insurance benefit that your family receives in the event of your sudden demise within the policy period; the entire amount is tax-exempt under Section 10(10D) of the Act.
Protection against Accidental Death, Disability, and Critical Illnesses
Term insurance plans also offer protection to the policyholder against accidental death, disability (both temporary and permanent), and critical illnesses such as cancer. Thus, you and your family can avail of immediate financial assistance, over and above your insurance coverage, in case you are detected with a life-threatening ailment or met with an accident. This additional protection is either inbuilt into the term insurance plan coverage or can be opted-for in the form of term insurance riders.