Term Insurance Plan: Benefits and things to remember when purchasing a life term Insurance plan

After getting a job, people usually get busy with life, planning their careers, marriage, family, and other stuff. However, buying an insurance policy usually comes as the last thing on the to-do list, which actually shouldn't be the case. Not many realise that life insurance plans act as a safety blanket to keep an individual and their families financially secure in case of any unforeseen event.

Moreover, the best time to get a term life insurance plan at an early stage not only saves on the premium but also helps to enjoy the tax benefits. However, before buying a term life insurance, here are a few factors you should keep in mind.

Term life insurance

Completely different from life insurance plans, term life insurance is a type of plan that offers full risk protection to the policyholders. In this case, these plans offer a death benefit to the insured person in case of his/her untimely death. This serves as a financial security for the family and relatives of the life insured. Covering a variety of eventualities like untimely death, critical illnesses, and disabilities, term insurance plans are not just affordable but also provide financial security for a longer term. However, there is a catch to it. Unlike life insurance plans, term life insurance plans don't provide maturity benefits in case the life insured survives the policy term.

Benefits of term life insurance

Affordable: Term insurance plans are considered to be the most affordable type of life insurance. Also, the earlier a person buys a plan, the lower the premium rates. As there is no maturity benefit or savings option, term life insurance plans come with lower premium amounts compared to life insurance plans.

Higher coverage: In comparison to life insurance plans, term plans are known for offering much higher coverage to the person insured. A person can take a cover for 40 years or more to ensure that the plan covers any sort of uncertainty that comes even after retirement.  

Tax benefits: Certain term insurance plans also provide tax benefits as they help to save taxes to a great extent. For instance, taxes can be saved under Sections 80C, 80D, and 10 (10D) for premium paid on a few term life insurance plans.

Insurance cover for critical/terminal illnesses: Besides death coverage, term insurance plans also provide coverage for critical illnesses where the insured person is eligible to receive financial assistance for a few serious illnesses, which will help to receive proper health care without having to use their savings.

Things to keep in mind when purchasing term insurance plans

• One should select the term life insurance plan as per the requirement of varied needs. It’s important to note that you should not remain under-insured while choosing a plan.  
• Keeping in mind the future circumstances, one should determine whether the coverage amount will be sufficient for critical illnesses or for the family in case of unfortunate incidents like accidental death.  
• Choosing the right insurance company is very important before purchasing a term insurance plan. You should finalise the plan after comparing the offers and the benefits of different insurance companies.
• Selecting the necessary add-ons like additional cover for accidental death, cover for critical/terminal illness, and waiver of premium on disability or critical illness is also very crucial.