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Advantages and Disadvantages of Term Insurance in India you should know about

The term insurance is one of the best lifesavers that a responsible individual can own. Although there are many investment choices available, the term insurance plans differ from others. This can be simply implied as the best choice to protect your family in your absence. 

Why should one think of buying a term insurance plan? Is owning a term insurance plan beneficial? This is a very obvious doubt that anyone may come across. The main reason for this question is that term plans do not offer financial returns or benefits; perhaps it is going to benefit the family or the nominee after the policyholder’s demise. Although there are multiple plans available to give you returns during your lifetime, they are not effective in providing protection to your family monetarily after your absence. However, if you really want to secure your family financially and not let them down by any means, then choosing the best term insurance plan will be a perfect option to think about. 

Are the term insurance plans effective and advantageous? 

This question can be answered only after analyzing certain factors. However, the pros or cons will depend on how an individual proposes to take the plan. 

The benefits of a term plan are ample, whereas the cons are also likely to make one feel or think, why should I opt for a term plan? To get a perfect answer for these above-said questions and choose the right term insurance plan, you need to get some ideas of their pros and cons. Almost all the term insurance from all insurance companies will have more or less similar features and advantages. By understanding them from a general perspective can undoubtedly give you a clear idea indeed. 

Pros and Cons of Buying Term Insurance Plans

Pros Cons
Cost-effective No Return on Investment
High coverage Buying at Later Stage
Easy & Simple to buy No Financial Assistance while you are Alive 
High Surrender Value No Wealth Creation
Tax Benefits No Cash Value

Now let’s understand the advantages and disadvantages of a term insurance plan in detail as listed below:

Top 5 Advantages of Term Insurance Plans

  1. Cost-Effective: Undeniably, the foremost benefit of term life insurance is the cost. Unlike the other types of investment and life insurance plans, the term plans can be bought at lower premium prices. This affordability makes even a low-income person easily own an insurance policy with maximum benefits. 
  2. High Coverage: Another best thing is high coverage, which is not possible in the case of an investment plan. A high coverage means high financial security to your family. Anyone would obviously want substantial financial security for their family, which the term plan offers.
  3. Easy and Simple to buy: Buying a term plan is very simple and easy. It does not involve any complicated procedures or paperwork. You can simply buy it online without even the assistance of an insurance agent.
  4. Surrender Value: The surrender value of the term plan is higher. Therefore, you can surrender your policy and get the attained value in a few years of inception. 
  5. Tax Benefits: The term plan, of course, offers you tax benefits, which can be used for your income tax submission or for certain tax exemptions. Therefore, the premium you are going to pay will never go to waste in the case of a term plan. 


Top 5 Disadvantages of Term Insurance Plans

  1. No Return on Investment: Unlike other investment plans, term insurance does not give you any return on investment during your lifetime. Perhaps, the only benefit you can expect is to provide your family financial protection after your life.
  2. Buying at a later stage: If you buy a term plan at a later stage of your life, you end up paying a high premium for a higher sum assured which is impossible for all people. Some may be in need to go for a high sum assured but unable to pay a higher premium. In such conditions, the individual is either forced to take up an extra burden to pay the premium higher than what he budgeted or compromise the sum assured.
  3. No financial assistance if you are alive: This is the major con of the term plan. You can never expect financial aid from your term plan if you are alive, especially when you want to withdraw a partial amount or any form of return that another type of insurance plan offers. 
  4. No wealth creation: If you have any goal to create wealth by paying your premium towards the term plan, that will only lead you to disappointments. This is one of the term insurance disadvantages. Term plans are no-profit plans; perhaps they only enforce you to pay the premium until the term plan matures or the policyholder demises and the sum assured is paid to the family members or the nominee. 
  5. No cash value: You can never expect any cash value from the term plan. The money you pay towards premium is paid, and you can never expect any cash value for it.


The above-distinguished pros and cons of a term insurance plan could have given you some idea. However, there is no doubt that such a plan will always be of good support to your family in an unforeseen incident. Therefore, think of the maximum advantages you will get from the term plan than the cons and make the buying decision at the earliest.

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