Last Updated on November 9, 2024 5: 36pm
Many Indians are underinsured due to the limited awareness of the benefits and workings of term insurance plans in India. However, if you are the sole breadwinner of your family, you must get a term insurance plan to secure your family’s financial future in case of your absence. This article will discuss the meaning of the term insurance, how it works, and the benefits of buying one.
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What is a Term Insurance Plan?
Term insurance is the simplest and purest form of life insurance plan. It offers financial protection to your loved ones after your untimely demise. However, you must pay premium amounts at regular intervals so your family can file a claim and receive the benefits.
How Does a Term Insurance Plan Work?
When you buy a term insurance plan, the insurer will offer you comprehensive financial coverage at reasonable premium rates. They offer death benefits to your family and loved ones after you pass away during the insurance period. However, if you survive the policy tenure, you will not receive any maturity or survival benefits from the insurer.
What are the Benefits of Term Insurance Plans?
There are several benefits of buying a term insurance plan. Some of them include:
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1. Financial Security
One of the primary benefits of term insurance is that it offers financial coverage to your family. It ensures your family does not face any financial constraints when anything unfortunate happens to you during the tenure. Your family can file a claim, and the company will give them the sum assured as a one-time payment or at regular intervals to meet their expenditures.
2. Customisable Option
With a term insurance plan, you get the opportunity to customise your basic policy according to your insurance requirements. Riders offer extra coverage and ensure your family does not struggle financially. Common riders for extra benefits include accidental death coverage, critical illnesses coverage and total disability coverage as riders.
3. Comprehensive Coverage
Term insurance is a cost-effective option due to its straightforward nature. Since it does not involve investment components, the premiums are generally lower than other types of life insurance. It ensures that your family receives more extensive coverage relative to the premiums paid. In addition, you can utilise a term insurance calculator to determine the coverage amount and associated costs.
4. Tax Benefits
Another reason for buying term insurance is to receive tax benefits under Section 80C and Section 80D of the Income Tax Act 1961. You can claim deductions of up to ? 1,50,000 per year under Section 80C of the Income Tax Act, 1961, for the premium you have paid for the plan. Moreover, you can claim tax deductions up to ? 25,000 under Section 80D of the Income Tax Act, 1961, for the premiums paid for term insurance riders, like critical illness cover.
5. Innovative Features
Insurance companies have shown a great deal of innovation, particularly in the realm of term insurance plans. For example, companies are active and proactive while reducing premium rates, even providing additional discounts to specific groups such as non-smokers. Moreover, you can easily purchase term insurance online by comparing the features of various companies.
Apply for a Term Insurance Online
You can easily buy a one cr term insurance plan online by following the simple guide below:
Step 1: Visit the official website of your preferred insurance company and create an account by entering your details.
Step 2: Choose the ‘Term Insurance’ option and provide your information, such as name, contact information, annual income, date of birth, health issue, medical history, etc., and click the ‘Check Price’ option.
Step 3: Enter the insurance amount, premium payment term and other required details, as per your preference, and click the ‘Proceed’ button.
Step 4: Select the payment method and click the ‘Pay’ option to make payment via your debit card, credit card or UPI.
Step 5: You will receive the term insurance policy in your registered email address after payment.
However, please note that it is a generic procedure to buy a term insurance policy in India, which may differ from one insurer to another.
Final Words
Securing your family’s financial future is critical for their well-being and your peace of mind. By taking proactive steps now, you can ensure they are protected in your absence. Buying a term plan while young and healthy enables you to pay lower premiums and get tax advantages, maximising your savings and minimising tax liabilities.