One of the most important financial decisions of your life is buying life insurance since it directly impacts not only you but also your loved ones. When it comes to buying life insurance, term insurance is one type that can stand apart from all others. Read further to understand term insurance and its features to make the most of your policy.
What is term insurance?
Term insurance is a simple form of life insurance. It provides individuals with life insurance for a fixed tenure that they choose at the time of purchase. It does not have any savings or investment components attached, making it a form of pure life insurance. The policyholder can choose the tenure they want depending on their financial goals. The biggest perk of a term plan is that it allows you to get sufficient coverage for an affordable premium.
How can you make the most of your term insurance policy?
When you are buying term insurance, you want to be well-aware of the features and benefits it has to offer. Knowing about the details of your plan allows you to use to utilize the policy to its fullest potential.
Offers opportunity to maximise life cover
The purpose of life insurance is to be there for your loved ones financially in your absence. The amount of coverage you choose directly impacts their finances when you are gone. Hence, it is crucial that you choose the coverage that suffices for your family. Along with the needs of your dependents, you also need to consider any liabilities that you may have. When you take all these factors into consideration, the coverage amount might be huge. You can use a term insurance premium calculator to get an approximate premium that you have to pay for the life cover you need. With term insurance, you can maximise your life cover with ease since they tend to be the most affordable plans available.
Most affordable plans in the market
One of the biggest benefits of buying term life insurance is its affordability. Their premiums are often lower as compared to other types of life insurance. It does not include any maturity benefits and the plan expires when the tenure ends. Since the plan is for a finite period of time, policy providers are able to offer relatively higher coverage for an affordable premium. You can also choose the frequency of premium payments as per your comfort from the available options. With affordable premiums, an individual can secure their family’s future while still being able to pursue their other financial goals.
Offers tax benefits on multiple levels
Term life insurance is a type of life insurance and has tax benefits on several levels similar to any other type of life insurance. The premiums you pay for your term plan are subjected to deductions as per Section 80C of the Income Tax Act. In case of the unfortunate demise of the policyholder during the policy duration, their nominee will receive the sum assured. The sum assured that the nominee receives is also exempt from taxes according to Section 10 (10D) of the Income Tax Act. While planning your taxes, instruments like term plans come in handy for saving taxes.
Offer several riders
When you buy term insurance, you may get the option of adding riders to your base term plan. Riders are additional benefits that you get by paying an additional amount of premium. You can choose from amongst the different types of riders based on your requirements. The common riders that most insurance providers offer are critical illness riders, waiver of premium riders, accidental death benefit riders, and income benefit riders. You can use a term insurance premium calculator to get an estimate of the increase in your premium amount for any rider that you choose.
When you are buying a term plan and have clarity on what term insurance is and what it offers, you are bound to make a smart decision. Ensure that you compare different term insurance plans and choose the one that fits your needs and for which you can pay easily throughout the policy duration.