Term insurance has gained colossal popularity over the years simply because apart from being the most unambiguous insurance product, it also provides the most bang for one’s bucks. No need to say that people looking for financial security for themselves as well as their family members usually opt for term insurance.
Financial experts say that there is no uncertainty as there is no repay on the amount given as premium and this policy simply offers to pay the nominee of the policyholder the amount insured for in case of the death of the policyholder during the tenure of the policy.
Here are 5 reasons why everyone should buy a term insurance plan:
Term plans are easier to comprehend and simpler in usage, unlike, say, an endowment plan or a Ulip. You just need to pay the premium and your life will get covered for a certain amount.
“Term insurance is the easiest-to-understand life insurance product. It simply protects the life of the insured by the amount equal to the cover mentioned in the policy. Number of years the risk cover will remain valid as well as the premium payable and other terms and conditions are easily accessible from the policy,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.
Apart from being easiest-to-understand, term insurance is also the cheapest form of life insurance. It is cheaper than other insurance plans as it does not mix insurance and investments. It is, therefore, the best way for the bread earner to protect his family in case of his death.
Provides larger cover
Term insurance policies also offer larger life cover when compared with other types of insurance for the same premium. Because of this advantage, it is possible for everyone to get adequate life cover not only for oneself but also for one’s near and dear ones. Best part being that the premium is quite affordable as well.
Term insurance plans provide early-mover advantage. In fact, you can usually buy a term insurance plan starting from 18 years till 65 years. However, as the premium for term insurance steeply increases with advancing age, it is better to buy a suitable plan as early as you can so that the premium remains most affordable.
“The premium payment during the tenure of the policy remains fixed. Also, the younger you are the cheaper is the premium for any policy. Hence, it is advisable for the earning members of any family to take insurance as early as possible,” says Kapur.
Tax benefits on the premium payment can be benefitted u/s 80C of the Income Tax Act, 1961, along with further deductions up to an amount of Rs 1.5 lakh. The insured can also avail of exemptions u/s 10(10)D for receiving any amount as part of maturity benefits from his/her insurance policy.