Top 5 Term Insurance Benefits That Make It a Smart Choice

At a Glance

1. Introduction
2. Top 5 Term Insurance Benefits to Lookout For

2.1. High Coverage at Affordable Premiums

2.2. Financial Protection for Family

2.3. Tax Benefits Under Income Tax Act

2.4. Option to Add Riders for Enhanced Coverage

2.5. Flexibility in Policy Tenure and Payout Options

3. Most Trusted Term Insurance Companies in India
4. Conclusion

Introduction

Financial security is at the top of everyone's agenda. Investing in a term insurance plan is one of the most effective methods to secure your family's future. With several benefits, term insurance benefits make this policy a prime option for people looking for budget-friendly and wide-ranging coverage. Whether you have a basic plan or term insurance with maturity benefit, this policy keeps your family members safe if you are no longer around.

Moreover, term insurance provides tax-saving advantages, choice of payouts, and riders to increase coverage. Let us discuss the top five reasons term insurance is ideal for different people and financial objectives, enabling you to make an informed decision.

Top 5 Term Insurance Benefits to Lookout For

1. High Coverage at Affordable Premiums

The most important term insurance benefit is that it is affordable. In contrast to other life insurance policies, term insurance provides maximum coverage at minimum premium and can be afforded by people from all economic backgrounds. This provides financial protection without straining your budget.

Why Are Term Insurance Premiums Low?

Term insurance is entirely a risk cover policy, with no investment component. The company only offers cover for a fixed term, and this keeps premiums lower than standard life insurance policies. This low cost enables the policyholder to choose higher cover, and thus their family's financial future remains well secured.

How to Choose the Right Coverage Amount?

Choosing an adequate coverage amount under your term insurance policy is, therefore, of great significance for ensuring the financial security of your family when you are no more. For an adequate sum assured, the following key points should be looked into: 

• Your Monthly Expenditures and Future Financial Responsibilities: You would need to look at current expenses related to running the household and future financial responsibilities like rent, electricity, and healthcare costs to add up on the survival amount that the family needs to maintain its lifestyle.
   
• Outstanding Loans and Liabilities: A current home loan, car loan, personal loan, or credit card debts will need to be included. After all, your family should not pay these repayments anyhow in your absence. 
   
• Education as well as Marriage Expenses for Children: If there are children, consider their costs related to the school fees, the college tuition, and for the weddings in the future so that they stay financially secure for anything.
   
• Inflation and Rising Costs of Living: Basically the insurmountable needs of living such as housing, health, and daily expenses all depreciate over time due to inflation. Thus, every individual should take it into account in terms of insurance coverage.

Financial analysts recommend choosing a sum assured that is to be 10-15 times of their annual income by the persons, as it guarantees the financial protection of their dependents. It ensures that even in absence, their lives would not be affected by any financial distress and would continue normally. Selecting the amount on the basis of your own standards gives you peace of mind knowing that your beloved ones are taking care of.

2. Financial Protection for Family

The main reason for term insurance is to leave a legacy for your loved ones if something happens to you. The lump sum payout can be used to pay for living expenses, existing debts, and future objectives such as the children's education or house loans, and hence term insurance is a good fit for young couples and sole breadwinners.

How Term Insurance Benefits Your Loved Ones?

• Monetary Support at the Earliest: The family gets the sum assured upon the death of the insured, helping them deal with immediate expenses.
   
• Clearing Debts: The payout can clear out loans and liabilities so that family members are free from worrying about their finances.
   
• Future Planning: The amount can help with long-term ambitions, like higher studies, marriage expenditures, and property investments.

Who Should Buy Term Insurance?

• For young professionals out there, consider locking in lower premiums through term insurance at the very beginning of your career. 
   
• Married Individuals: You can take a term plan that includes all monetary liabilities in the name of your wife or husband to secure their future. 
   
• Parents: Make sure that your children's education and future never suffer under any circumstances in your absence. 
   
• Self-Employed People: you take a term plan that ensures security and meets your business obligations, should anything happen to you.

Also Read: What is the Right Age to Buy Term Insurance? A Complete Guide

3. Tax Benefits Under the Income Tax Act

You can also save tax by investing in term insurance with maturity benefit. As per Section 80C of the Income Tax Act, you are eligible to deduct the premium from your taxable income. Moreover, the death claim payable to the nominee is free from tax as per Section 10(10D), thereby a tax-friendly investment.

Tax Benefits for Policyholders

Financing a term insurance is suitable for a policy to save oneself financially. It has several tax advantages under a few sections of the Income Tax Act. Here is a brief description of the different tax advantages available to the policyholders: 

• Section 80C: The policyholder is entitled to a deduction of up to ₹1.5 lakh per annum on the premiums paid for the term insurance policy. This deduction would help in lowering the taxable income of the individual, thereby making term insurance a tax-effective investment.
   
• Section 10(10D): The death benefit that the nominee will receive in case of the demise of the insured is totally exempt from tax, as long as the policy satisfies the required conditions. This will, therefore, protect the intended financial assistance to dependents from the tentacles of taxation. 
   
• Section 80D: Any premium paid for riders concerning health, like critical illness cover, shall qualify for an extra deduction under this section if the policyholder opts for such riders. This is especially useful for a taxpayer wishing to enhance coverage and claim the maximum tax benefits.

Maximizing Tax Savings

To enjoy the maximum tax benefit, ensure that: 

• Your premiums are paid with regularity and within prescribed limits; 
• The period of your policy is in line with your tax-saving strategy; 
• You look for added riders that give tax exemption under different sections.

4. Option to Add Riders for Enhanced Coverage

Term insurance policies enable you to personalize your policy by including riders like critical illness cover, accidental death benefit, or disability cover. These riders augment your policy, providing complete protection over and above life coverage.

Popular Term Insurance Riders

• Accidental Death Benefit Rider: It attaches additional sum assured besides the primary sum assured amount with the policy under which the nominee receives a specified amount when the policyholder meets accidental death. It is aptly and ideally suited for such requirements of people engaged in a career or a profession of high risk and those who frequently travel.
   
• Critical Illness Cover should the policyholder become critically ill from conditions like cancer, heart attack, failure of kidneys, or stroke-the insurer would then be liable to pay a specified cash amount that could be used by the policyholder to settle medical expenses, replace lost income, or meet any other financial burden. This benefit would help mitigate the financial stress associated with long durations of treatment.

Are Riders Worth It?

Riders add to the policy's overall cost but offer priceless financial protection. If you are more at risk based on your line of work, health issues, or lifestyle, purchasing these riders is strongly suggested.

5. Flexibility in Policy Tenure and Payout Options

Another important term insurance advantage is the freedom it provides in policy duration and payment terms. You have the option to select a plan as per your financial objectives, be it a lump sum payment, regular income, or a mix of both. Moreover, term insurance with maturity benefit provides a guarantee that you will get a payout in case you outlive the policy term, making it a great investment.

Types of Payout Options

1. Lump Sum: A one-time payment to the nominee after the death of the policyholder. 
2. Monthly Income: Regular payment for a specified period of time to replenish cash inflow.
3. Combination Plan: Both monthly income and lump sum to cover expenses both short-term and long-term.

Choosing the Right Payout Option

Your payment choice depends on the financial acumen of your household, monthly commitments, and future requirements. Your dependents, if not conversant in handling huge amounts, should consider a staggered payout or monthly payment plan as the safer option.

Most Trusted Term Insurance Companies in India

Term insurance is a crucial financial tool that provides life coverage at affordable premiums, ensuring financial security for the policyholder’s family. Several insurance companies in India offer reliable term plans with comprehensive coverage. Here are some of the most trusted term insurance providers in India:

1. LIC (Life Insurance Corporation of India)

• LIC is India’s most trusted insurance provider, backed by decades of reliability and high claim settlement ratios.
• Offers term insurance plans like LIC Tech Term, which provide large coverage amounts at competitive premiums.
• Ensures claim security with its strong financial stability.

2. HDFC Life Insurance

• HDFC Life’s Click 2 Protect Super is one of the most popular term insurance plans in India.
• Provides flexible options such as increasing cover, waiver of premiums, and whole life protection.
• Trusted for its high claim settlement ratio and customer-centric policies.

3. ICICI Prudential Life Insurance

• ICICI Pru iProtect Smart offers coverage for death, disability, and terminal illness.
• Provides additional benefits like accidental death cover and critical illness coverage.
• Known for its seamless claim process and strong customer support.

4. Max Life Insurance

• Max Life Smart Secure Plus provides comprehensive life cover with return of premium options.
• Offers add-ons like accident cover, critical illness benefits, and waiver of premium.
• One of the highest claim settlement ratios in the industry, ensuring reliability.

Choosing a trusted term insurance provider ensures financial protection for your family while giving you peace of mind.

Also Read: Term vs Whole Life Insurance: A Comprehensive Guide

Conclusion

Choosing the best policy for term insurance is vital for longevity in finance. Affordable premiums, coverage, and customizable options make term insurance perfect protection for the family for the future. Assessing options against your needs provides the kind of peace and financial stability one can enjoy. 

OneAssure has comprehensive term insurance policies featured and are available to guide you in this process. Secure your future today with the best plan from OneAssure and ensure the financial safety of your family. Don’t waste time—get the best start for a future without worries by investing in smart insurance coverage.