10 Reasons to Buy Term Insurance Plan

With increasing financial awareness, people have become very eager for term insurance plans at an early age. Term insurance plans offer an assured sum to the nominee in the case of uncertain demise of the policyholder. In other words, term insurance policy provides financial security to a policyholder. This policy becomes very much beneficial for the person who is the only bread earner of the family. In this column, we will discuss the top 10 reasons to buy term insurance plan instead of the normal money back policies in the market.

Low premium rate

If you opt for term insurance plan at your early age, you will need to pay the lesser premium. Suppose you take a term insurance plan at the age of 25 years and the sum assured is Rs. 1 crore. In this case, to avail this facility you need to pay Rs. 7000/- per year till the age of 60 years. This is quite cheaper than the traditional money back policies.

A longer period of life cover

Term insurance plan offers insurance coverage from the age of 20 years to 99 years of age. Generally, one individual should take a term plan up to the age of 60 years.

Fixed Instalments

Once you opt the term insurance plan, your term plan provider sets a fixed premium for you after you fill up the sum assured, term plan period, riders if any, etc. Further in future, you don’t need to increase the premium amount. The premium will not be altered in the near future. The insurance company will not charge you any increase in the installments or premiums payable.

Increasing life cover term plans

There are several term plans which offer increasing life cover at set intervals with a predefined percentage increase in premiums. This enables a policyholder to receive an increase in the sum assured. Suppose you are a Government employee and you take a term plan at the age of 25 years of Rs. 1 crore till the age of 60 years. Now, it is obvious that your income will increase in the future. So, you may set an increase in assured sum after 20 years to say Rs. 1.5 crore. Then your insurer will set the installment after 20 years accordingly. If you opt for the increasing assured sum and increase installments, your insurer will set the assured sum and the premium accordingly.

Riders can be added

Currently, there are many riders available in the market. These riders are,

  • Accidental death rider
  • Permanent & Partial disability
  • Critical illness

Actually, these riders cover extra insurance for certain conditions in association with the term plans. This extra coverage is offered by term insurance companies with extra fees. It depends on you whether you want to avail these riders.

If your occupation is such that you have to travel a lot, you can opt for accidental death rider along with a term insurance. On the other hand, if you require working hard and have to put physical work, you can opt for a permanent and partial disability rider. This extra rider will ensure your life if you become physically disabled in any way. Again, if you have a tendency of any ailment, you can take the critical illness rider. So, taking a rider depends on several conditions. Choose according to your requirements.

Tax-free Death Benefit

The assured sum received on the demise of the policyholder is completely tax-free. No kind of income tax or other taxes is levied on the sum issued to the nominee. The sum is not considered as an income as the policyholder has paid the taxes if applicable. The sum received by the nominee is completely tax-free under section 10(10D) of the income tax act, 1961.

Living benefit

Apart from the death benefit, there are many term insurance policies that cover living benefit too. You may opt for living benefit provider while buying term insurance plan.

Accidental benefit

Term insurance policies offer extra benefit in case of accidental death. Suppose an individual has opted for Rs. 1 crore with an accidental benefit of Rs. 50 lakh. So, if the person dies in an accident the nominee will be eligible to get Rs. 1 crore+ Rs. 50 lakh = Rs. 1.5 crore.

Payout in time at once or installments

An individual may opt for lump sum payment or via installments of the assured sum for the nominee. Let’s make it clear with an example. An individual dies and the sum assured is Rs. 1 Crore. Now,

In the case of lump sum payment, Rs. 1 crore will be credited to the bank account of the nominee of the policyholder at once.

In the case of installment payment, the sum assured to the nominee will be given partly year-on-year basis or on a monthly or quarterly basis.  On the other hand, if you have opted regular payment via yearly or monthly or quarterly or yearly installment then your nominee will get

  • 10 lakh for the first year,
  • 11 lakh for the second year
  • 12 lakh for the third year
  • and so on

Have you noticed that the sum is increasing year-on-year? This is because your term insurer offers the nominee the money with 10% interest year-on-year basis.

It is easier to buy a term insurance policy

Now, in 2018, you are left with many options to choose the term insurance plans by either online or offline. If you want to buy a term insurance policy online then go to the official website of the term insurance company you want to opt for. You will get all the relevant information, points, covers, sum assured, and tenure of the term plan. You can buy a term insurance plan by visiting the registered offices of a company. In addition to, you need to buy in accordance with your requirements.

The bottom line is you should buy a term insurance plan to secure your family in case of uncertain circumstances. You need to consider your current income, future expenses while choosing the term insurance plan. The term insurance will give you peace of mind. You will relax that money will be available to protect your family in your absence.

If you have any queries regarding term insurance plan feel free to comment and please share if you loved the post.

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