Life is completely uncertain and one cannot imagine when the most unfortunate reality of life that is ‘Death’ may knock one’s door. Since neither one can control death nor he/she can predict it, but one can be prepared for it and safeguard his/her family financially by opting for a suitable term insurance plan. Term insurance plans especially an online term plan can work as a financial safety net to the entire family of the breadwinner against un-eventuality of life like death. It is one of the most affordable types of life insurance cover that a person can give to his/her family.
However, the death benefits are given to the nominee or beneficiary of the policyholder, if the policyholder dies within the term of the policy and if he/she outlives the term, no benefit is provided to the insured or his/her family. In simple language, the death benefit becomes zero if the policyholder dies after the expiry of the policy.
Benefits of Term Insurance Policy
Term life insurance have the following benefits-
Term plans are much easier to understand as compared to the policies that combine risk cover with investments or savings like ULIPs and endowment policies. It is not easy for a layman to understand the complexities of these cash value plans.
A term life is all about simplicity; you just have to pay the premium and get covered for the policy term – as simple as that.
With some of the best term insurance plans, it’s easier to get a large life cover amount at a much smaller premium. For instance, a 30-year-old individual can easily get a Life Cover of Rs. 1 crore for 20 years at a premium of approximately Rs. 500 per month.
On the other hand, for the same sum assured, the premium of an endowment policy can go up to Rs. 2100 per month, which is indeed a huge amount of difference.
With term plans, you get dual tax-benefits. The first tax benefit can be availed on the premiums paid. The maximum permissible limit of this benefit is up to Rs 1.5 lakhs u/s 80C. The second, the lump-sum amount paid to your family in case of an eventuality is eligible for a tax rebate under section 10(10)D of the Income Tax Act.
Critical Illnesses Cover
New age term insurance plans have introduced critical illness cover to provide additional protection to the insured. Now, besides safeguarding your family’s financial future in your absence, you are also protected against lifestyle and critical illnesses. All you have to do is pay a nominal amount of additional premium and you will be provided with a lump-sum cash pay-out on the very first diagnosis of a critical illness like cancer, heart attack, kidney failure, etc.
Disability Coverage Rider
With this particular feature, the insurance provider will pay all your future premiums if there is a case of total or permanent disability. Here, you will get the assurance that your life coverage will remain active even if you are unable to pay your future premiums due to a permanent disability.
The term insurance plans also give you the option to enhance your family’s financial security by opting for its double pay-out feature. For example, if you have got a life coverage of Rs. 1 crore, with additional Accidental Cover, in case of an accidental death, your family will get Rs. 2 crores instead of the initial amount of Rs. 1 crore.
Variety of Claim Pay-outs Options
Although, most of the term insurance plans pay death benefit as a lump sum amount, you still have the option to disperse this pay-out payment in different forms. There are certain scenarios wherein the policyholders don’t feel too confident about the financial reasonability of their dependents.
To handle such scenarios, one can opt for different payout options available with the insurance companies wherein 50% of the sum assured is paid as lump sum amount and other 50% as monthly payments or 100% of the sum assured is given as monthly payouts.
It all depends upon the financial understanding and maturity of your family members and your own decision that how you want to get the life cover amount given to them.
This arrangement usually proves to be beneficial in case an emergency situation arises. Your family can use the lump sum amount to deal with the particular emergency; whereas, the monthly pay-outs can be used to handle monthly expenses.
Adjust It Suiting Your Life-Needs
The best term insurance plans come with an option to be adjusted according to the current stage of your life. For instance, if you buy a term plan in your bachelorhood for a sum assured of Rs 25 lakhs, you can get it increased to Rs 50 lakhs or more, once you get married. In other words, a term plan allows you to make amendments in it at any time during its tenure.
There are certain riders available with a term plan that can be used to add another layer of protection to your plan. Few of these add-on riders include disability rider, accidental death rider, income benefit rider, critical illness rider, waiver of premium rider, etc.
Different riders have a different set of benefits attributed to them which increases the value of your policy. A combination of different riders makes your policy an all-inclusive, well-rounded which ultimately benefits your loved ones.
Protection for Your Liabilities
It’s a natural phenomenon to procure assets in order to lead a comfortable life. Besides buying a house, car, etc. there are other liabilities too that we procure in the forms of debts or credits.
These liabilities are not necessarily in smaller amounts that can be taken care of in a few months. In case something untoward happens, you need to make an arrangement that will help your family to deal with the expenses related to those liabilities. Term insurance will work as an income replacement tool in your absence so that your loved ones aren’t loaded with these unnecessary burdens.