Top 5 Benefit Of Term Insurance For Every Indians

Top 5 Benefit Of Term Insurance For Every Indians

Having a term insurance plan is one of the most important financial decisions that you can make we will look at the many benefits of term insurance and how you can extract maximum value from this essential protection instrument.

Benefits no. 1 of term insurance

Let's get started benefit one term insurance is one of the most affordable forms of insurance out there to put that into perspective we pay about 2% of the car's present value.

As its premium in comparison term insurance plans are available at as low as 0.1 percent of the sum assured that's 20 times cheaper than a car insurance premium 

Not only is term insurance the least expensive insurance out there but to add a cherry on top of the cake most insurance companies on online platforms offer an extra discount on your term insurance premiums as compared to offline channels 

Do make sure you take advantage of this and further lower your term insurance premiums.

Benefit no. 2 of Term Insurance

Term insurance plans offer a much higher coverage as compared to traditional or ULIP plans in traditional or unit-linked plans 

The coverage offered is generally 7 to 10 times the premium you pay if you pay a yearly premium of 20,000 rupees.

You can expect about 2 lakh rupees of sum assured 2 lakhs of sum assured is too lower coverage and might cover only 3 to 5 months of your family's expenses 

On the other hand term insurance plans of a much higher sum assured so that you can leave your family and dependents with enough money so that they don't go through financial hardships in your absence.

Example

Let's put some numbers behind it on the average sum assured of a term insurance policy is a little over one crore rupees which comes to an average premium of 17,000 rupees 

This one crore sum assured is about sixty times of the sum assured I would have received in regular traditional money back endowment or ULIP plan net-net term insurance plans offer high life insurance coverage at very low premiums.

Benefit number 3 of Term Insurance

Term insurance plans are super simple to understand simplicity is one of the reasons for the growing popularity of term insurance plans.

Term insurance plans are Pure Life covers which focus on offering your dependents the contracted sum assured in case you were to die you simply need to ensure that you have been paying the premium properly.

The benefit of term insurance related to Tax

Benefit for term insurance plans offer immense tax benefits there are three types of tax. 

Benefits that term insurance plans offer one benefits under Section 80C which allows an exemption for life insurance premiums of up to 1.5 lakh per annum to 

Benefits under Section 10 (10) D which pertains to death or maturity benefits that are payable under the policy this section directs all insurance benefits payable to be fully exempt from taxes.

Which means your beneficiaries will get the entire coverage upon your death and no taxes will be deducted.

Benefits under Section 80 D allow an exemption to that part of the premium that is paid for health-related coverages like critical illness riders which can be added with a term insurance plan.

Remember tax laws change often so it is wise to be on top of this and consult your tax advisor for greater details 

The premiums of term insurance plans are locked for the duration of the plan it is surprising how many consumers don't know this but when you purchase a term insurance plan you are effectively locking the premium that you'll be paying this year the next year and every other year until the end of the term plan.

And this is where it becomes highly beneficial and smart of you to start your term insurance plan as soon as possible when the premiums are lower for younger ages.

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