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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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Frequently Asked Questions (FAQs) for Term Insurance

This being a term 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 70 years of age.

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.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

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, a term plan pays a part of the sum insured to treat your disease.

Term insurance 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 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 policy remains active until the expiration date.
  • Income Rider: The rider 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 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 a Term Insurance?

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