Benefits of Term Life Insurance that one should know in 2021
Today, apart from office goers and professionals who are at some point, compelled to take term insurance for the tax benefits besides its other actual benefits, many people have started realizing the importance of owning a term insurance policy. Recently, Covid-19 has also made many people own a term insurance policy, regardless of their income and family conditions.
This impact in 2021 has created a big difference in the number of individuals who are willingly approaching insurance companies to buy term insurance policies and other insurance products. But what are the benefits of term life insurance which make it an inevitable choice for every individual? Let’s take the example of Bala, who works in a private company and has elderly parents who are over 75 years old, wife, and children as dependents. So, the entire family is dependent on only one income source of Bala.
Bala strives hard to make some savings from his single income with the support of his wife. But is that saving enough to meet any unexpected expenses or unforeseen events and meet the financial challenges in the future?
The answer is perhaps NO.
So, now it is time for Bala to buy a term insurance policy because life is uncertain and it is necessary to secure his family’s future financially. To help Bala understand what a term insurance plan is, and term insurance plan benefits, here is some valuable information: –
How Effective and Beneficial is the Term Insurance policy?
Here are a few points to highlight the effectiveness and term insurance benefits:
Top 7 benefits of Term Insurance Policy you should know about
- Financial Security: The term insurance plan provides financial security to the insured’s family in case of his/her sudden demise. The dependents of the insured will be relieved of the unexpected financial burden and can continue leading a comfortable life.
- Simple to understand: Term insurance is considered to be the simplest form of life insurance due to its ease of understanding. There are no complicated terms and conditions. Term insurance simply offers life coverage in the form of a substantial sum assured on the payment of regular premiums. The sum assured gets paid to the policy nominee upon the demise of the insured within the policy term.
- Rider Benefits: Considering today’s unpredictable scenario, term insurance offers rider benefits that further enhance the scope of the base policy. Critical illness, accidental death benefit, waiver of premium are some of the common riders that one can choose.
- Affordable: Affordable premiums with high sum assured is one of the key highlights of the term policy. Ranging from a few thousand as a premium, the policyholder is flexible to choose the premium amount according to his or her affordability limits. However, this may differ with the insurance company and the type of term plan you are going to choose.
- Whole Life Cover: The term insurance plan offers whole life cover to the policyholder which means the policyholder gets comprehensive coverage up to the age of 99 years or more depending on the policy guidelines.
- Flexible-Premium Payment: The policyholder is absolutely flexible to pay the premium amount by any mode and terms like monthly, quarterly, half-yearly, or annually. Therefore, according to your income frequency, you can pay your premium in a flexible way.
- Rebates: The term plans also offer rebates, such as discounted premiums for non-smokers and women. This is because there are not many adverse risks associated with such policyholders.
Tax benefits of Term Insurance
Although term insurance has many incredible benefits to offer, and income tax benefits are one of them which should be understood before opting for a term insurance plan. Here is a brief about the term insurance, income tax benefits:
- Section 80C: Under the Income Tax Act 1961, one can avail of the tax benefits on the premium paid regularly towards the policy. The premium up to Rs. 1.5 lakhs are eligible to claim your tax benefits. It becomes eligible for tax exemption U/S 80C of Income Tax Act 1961.
- Section 10(10D): The insurance pay-out amount that the beneficiary receives after the demise of the insured is tax-free under section 10(10D) of the income tax act. Also, the maturity benefits offered by some selective term insurance plans, such as Return of Premium Term Plan – TROP is eligible for the tax exemption under this Income Tax Act 1961.
- Section 80D: The tax benefit of this section is available only for health insurance plans. However, if the term insurance plan contains features or riders like surgical care, critical illness, hospital care, etc., then the policyholder can claim benefits under Section 80D.
With all the above-highlighted benefits, Income Tax benefits, and features, there is no doubt that now Bala would have got some better knowledge about the term insurance plan. He can now identify a reliable insurance company and a perfect insurance term plan to secure his family’s financial future.
If you are also in the same position as Bala, then plan to buy term insurance today. To know more about various term insurance policies available in the market, visit iiflinsurance.com