Term Insurance Benefits

Life is uncertain, and one can never predict what the future holds. Understanding the importance of term insurance is crucial to ensuring your family's financial security in your absence. You can ahcieve this by opting a term isnurance plan.

Term Life Insurance plans are the most basic, cost effective and easy to buy life insurance plan which protects the financial future of your family at a nominal cost. The premiums paid for term plan are minimal compared to any insurance plan.

Top 9 Benefits of Term Life Insurance 

Here are thekey benefits of term isnurance that a policy offers:-

Low Premium :

Through a term Insurance Plan, you can have the highest death benefit or life cover in lieu of a nominal premium. Premium of term plan is lower than other insurance plans. It provides only life protection plan and no ancillary benefits or investment element is attached.

Benefits of Starting Early:

The premium you pay for the term plan depends on your age and the policy term.  If you buy a term plan early in your age, the premium will be comparatively lower.

Lower Tenure:

You can take a Term Plan for as low tenure as 10 years. Shorter term plans can be availed in case you have taken home or personal loan etc. For example – You can take a term plan for 10 years for the amount equivalent to your home loan amount if the home loan term is 10 years. This ensures that if something happens to you during the loan period, your family is able to retain the home by repaying the balance loan amount. You can also apply for a long term policy that can cover multiple or sequential loans.

Increasing Life Cover Term Plans :

There are term plans which provide increasing life cover at set intervals with pre-defined percentage increase. This helps the policy holder increase the life cover in tandem with his or her rising income levels.

Longer Term Life Cover :

Term plans can be taken for a long period of time. Generally one can take a term up to age 70; however, some companies allow taking the cover up to age 75.

Fixed Premium :

Once the insurance company accepts your policy against a certain premium, it will never revise or change the premium during the policy term. Therefore, you can be rest assured of paying a fixed amount annually without any increase in future. The taxes are payable on the premium as per prevailing tax laws.

Riders Can be Added :

Some term plans allow you to add riders like, accidental death cover, critical illness rider or specific disease riders, like cardiac cover etc. Riders are the additional benefits that come against a nominal premium.

Income Tax Benefits:

In respect of premium paid, you can avail a deduction of up to Rs 150,000 per annum under Section 80C of the Income Tax Act 1961. Also, the death benefit paid to your nominee (in case of unfortunate death) is tax free under Section 10 (10D) of the income Tax Act 1961.

Easy to Buy :

Buying a term plan is the easiest thing. You can compare the premium of various term plans from different comparison websites and choose the plan suitable for you. You can visit the respective company website and buy the term plan in few easy steps and get insured. Remember, term plans bought online are cheaper than regular term plans which are bought through company offices or agents.

Also Read: How to Determine the Ideal Coverage Amount for Term Insurance

Why Choose a Term Insurance?

Opting for term insurance is crucial for financial security, as it offers significant term plan benefits  and emphasizes the importance of term insurance . Here’s why it’s a smart choice:

• Affordability: Term insurance offers high coverage at low premiums, making it a cost-effective option for substantial financial protection.
• Simplicity: It lacks an investment component, simplifying its structure compared to other insurance types making it straightforward to manage.
• Flexibility: You can adjust coverage and add options like critical illness or accidental death riders, tailoring the plan to your needs.
• Tax Benefits: Premiums qualify for tax deductions under Section 80C , and beneficiaries receive the death benefit tax-free under Section 10(10D), enhancing the plan’s financial efficiency.
• Peace of Mind: Provides reassurance that your loved ones will be financially secure in your absence, safeguarding their future against uncertainties.

Term insurance is an essential part of responsible financial planning, ensuring reliable protection at an affordable cost.

Estimated Premium for Aviva India Life Term Insurance at Different Ages

The benefits of term life insurance  from Aviva India change significantly with age, affecting premium costs:

1. In Your 20s: Premiums are lowest for young adults. For a cover of INR 1 crore, a healthy individual might pay approximately INR 4,000 to INR 7,000 annually.

2. In Your 30s: As risk increases slightly, so does the cost. A person in their early 30s may pay between INR 5,500 to INR 9,000 annually for similar coverage.

3. In Your 40s: With further increased risk, premiums rise. Expect to pay between INR 10,000 and INR 15,000 annually for an INR 1 crore cover.

4. In Your 50s: Premiums are highest due to increased health risks and reduced insurance terms. Costs range from INR 18,000 to over INR 25,000 annually.

These estimates are indicative and can vary based on health, lifestyle, policy term, and coverage amount. It's best to consult Aviva India’s premium calculators or customer service for precise figures.

How to Choose the Best Term Insurance with the Right Sum Assured?

Selecting the right term insurance  is crucial for maximizing term insurance benefits. Here's how to ensure you choose an adequate sum assured:

1. Evaluate Financial Needs: Consider your family's current expenses, outstanding debts, and future obligations, such as education and retirement.
2. Income Replacement: Aim for a sum ten to fifteen times your annual income, ensuring your family can maintain their lifestyle without financial stress.
3. Consider Inflation: Choose a sum that accounts for the rising cost of living to maintain its purchasing power over time.
4. Policy Terms: Understand the terms, premium obligations, and additional benefits, such as riders, that enhance your coverage.
5. Compare Plans: Analyze different policies from reputable insurers for features, benefits, premiums, and customer satisfaction to find the best match.

Selecting an appropriate sum assured in your term plan is vital to providing sufficient financial protection for your loved ones.

Also Read: What is Term Life Insurance Plan – Here’s all you need to know!

Conclusion

Due to increasing awareness about life insurance, term plans appeal to most of us because of the inherent benefits of life cover at the lowest possible premium, Income Tax Benefits and ultimately for the peace of mind with regards to safety of our near and dear ones. The premium you pay is a small price compared to the attached benefits of term life insurance.

Importance of Term Insurance Related FAQs

Why term insurance is important?

Term life insurance offers high coverage at low costs, providing financial security for your dependents. It ensures your family's stability in your absence without breaking your budget.

Is it good to invest in term insurance? 

Investing in term insurance is wise as it secures your family's financial future at minimal costs, especially if you are the primary earner.

What tax benefits does term insurance offer? 

Term insurance premiums are deductible under Section 80C of the Income Tax Act, and the death benefit is tax-free under Section 10(10D), offering substantial tax savings.

Is there a Maturity Benefit in Term Insurance?

Typically, term insurance does not offer a maturity benefit unless you opt for a term insurance with return of premium plan, which refunds premiums at the policy's end if the insured survives the term.

What is the difference between life insurance and term insurance benefits?

Life insurance often includes investment components and lasts a lifetime, providing maturity benefits. Term insurance is purely protective, offering coverage for a specified period without investment benefits.

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