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8 Best features of Term Insurance that you should know before buying
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8 Best features of Term Insurance that you should know before buying

In a post-pandemic world, anxieties related to an uncertain future have hit working professionals hard. Many individuals’ economies and ways of life have been affected in phenomenal ways. Therefore, one of the primary concerns remains securing one’s future financially through varied investments and insurance products during unforeseen situations. And term insurance is one of the most widely recognized financial tools that a policyholder can utilize to get their own future alongside their loved ones.

A term plan is made to cover the necessities of the insured and their family members through a guaranteed benefit amount in case of the policyholder’s untimely demise. Term insurance is one such product that effectively provides affordable means to secure one’s future with a substantial coverage amount. In addition, term insurance offers flexibility to the insured to customize their chosen plan as per their requirements and budget.

A term plan is also a resource that can assist one with getting or paying off their loans over the long haul, even in the absence of the main earning member. It is an asset to be utilized when unavoidable financial expenses are required to be met by the enduring family members without the policyholder.

Since the rudiments of a term plan have been set up, let us now dig deeper into the features of the term insurance that one can anticipate while making it an indispensable financial backup during challenging times:

8 Features of Term Insurance that you should know before buying

  1. Policyholder: The individual who signs the insurance documents and makes the premium payments related to the policy is the policyholder.
  2. Insured: The person whose life is covered under the term plan is known as the insured. In the case of this individual, the insurance company is responsible for processing the guaranteed payout sum to their dependents on the occurrence of the insured events.
  3. Low-Cost Premiums: It is an important and regular element in almost all life insurance and term plans. It is the nominal payment that a policyholder is required to pay to the insurer consistently all through the policy term. Regular payment of premium keeps the policy active and ensures life cover provided by the insurance company. In the case of term insurance, the premiums paid are much cheaper compared to the other life insurance policies against the large sum assured it offers.
  4. Policy Term: Policy term refers to the coverage tenure as chosen by the policyholder after counsel with the insurance provider. The duration for a term plan is generally longer than most standard life insurance plans. The tenure of the term insurance plan in India might go somewhere close to 25-30 years. The term plan reached maturity once the policy tenure was finished.
  5. Death Benefit: It is the guaranteed payout sum assured committed by the insurer to the policy beneficiary in case of the policyholder’s sudden demise. This sum assured is generally a financial asset for the policy beneficiary to keep up with their financial liabilities in the absence of the regular income due to the absence of the main earning member.
  6. Beneficiary or Nominee: The person who is assigned as the individual to get the guaranteed sum assured in case of the policyholder’s demise is known as the Beneficiary or Nominee. The nominees are usually family members, including spouses, children, or other family members who are financially dependent on the insured.
  7. Riders: A term plan with its varieties and multiple choices can be an ideal decision for individuals who wish to have strong financial stability for all unanticipated circumstances that might emerge in their life. Accordingly, term insurance plans offer extra benefits in the form of riders and advantages that can assist policyholders in getting ready for circumstances not restricted to death. Riders help in enhancing the scope of base coverage by providing extra coverage amounts for different scenarios. One can add riders for Disability, Waived Premiums, Income, Accidental Death, or even Critical Illnesses in their current term insurance plan. The expense of these riders is added to the base premium expense; subsequently, one ought to pick the right rider based on their requirement.
  8. Tax Benefits: Term insurance policies offers tax benefits for the premium paid towards the term plan under Section 80 C of the Income Tax Act. Also, the death benefit amount that is paid to the policy beneficiary comes under tax exemption Section 10(10D) of the Income Tax Act, 1961. A term plan is subsequently an ideal decision of financial protection and investment; a person can avail tax exemption of up to Rs. 1,50,000 from their net taxable income.

 

The benefits of term insurance can’t be ignored, and it is an essential tool to provide comprehensive financial security to your family in your absence. To find out more about the benefits and features of a term plan, you can get in touch with experts at iiflinsurance.com, who can direct you through the course of the term plan buying process and guide you with tailor-made solutions based on your requirements.

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