Among all the assets you buy to secure the lives of your loved ones financially, term insurance plans are one of the most crucial. That’s why almost every financial expert recommends them, and should be one of your first life goals when you start earning. 

Wondering why term insurance is important?

Keep reading to find out!

Term insurance plans enable you to secure the lives of your loved ones financially. Such policies enable them to get a sum assured in case of your unfortunate demise during the policy period, which allows them to cover their living costs and other expenses.

Thus, term insurance plans allow your nominees to maintain their lifestyle even in your absence while negating the hassles of looking for an immediate alternative income source.

1. Death Benefit

In case of your unfortunate demise within the policy term, your nominees get the death benefit or sum assured. This helps them cater to many expenses like hospital bills, debt, credit card bills, household expenses, children’s education fees, and more.

As a result, they can deal with the immediate expenses following your demise without using up their savings or tapping into other investments.

2. Financial Protection

Term plans enable you to offer financial protection to your loved ones by appointing them as nominees. They can be anyone in your family (spouse, children, parents), relatives, or others.

The person you appoint as the nominee will have the sole right to claim the death benefit upon your demise. Also, if you have multiple financial dependents, you can assign a percentage of the sum assured for each individual.

3. Affordable Premiums

Term insurance plans come with more affordable premiums than other life insurance products. Also, if you purchase a policy at a young age, the insurer may provide a lower quote due to better health stats and lower mortality rates.

Furthermore, term insurance premiums remain the same throughout the policy period. So, even with a tight budget, you can still provide financial coverage to your loved ones without stretching your finances.

4. High Coverage

Generally, the sum assured for term insurance plans ranges from ₹50 Lakh to ₹5 Crores. This enables you to choose a coverage amount that is high enough to cover your family’s financial needs and life goals.

Furthermore, if you start out young, you can get high coverage for a lower premium.

5. Multiple Payout Options

Now, it’s quite natural for your family to have financial needs that are different from others. Thus, term insurance providers offer different payout options, which you can choose from based on your family’s needs.

In this regard, most insurers offer one-time lump-sum payouts, one-time lump sum + fixed monthly payouts, and one-time lump sum + increasing monthly payouts.

6. Superb Flexibility

The importance of term life insurance also lies in the sheer flexibility these plans offer. You can choose a policy tenure (duration of the policy) as per your coverage requirements, along with a premium payment term (duration for which you pay the premium amount) based on your life goals.

Additionally, you can set a premium payment frequency, one-time lump sum, limited period, annual, half-yearly, quarterly, or monthly, according to your financial capacity.

7. Tax Benefits

The amount of term insurance premiums you pay within a financial year is eligible for a maximum tax deduction of ₹1.5 Lakh under Section 80C. Furthermore, no tax is levied on the death benefit or maturity benefit of term policies under Section 10(10D) (subject to certain terms and conditions).

However, for the latter, certain terms and conditions must be met.

8. Additional Coverage

When you buy term insurance policies, you can also avail yourself of optional riders. They come at extra costs that add to your premium but provide financial coverage for circumstances not covered under your base term plan. Also, they save the cost of buying a standalone policy to gain coverage in that particular scenario.

For instance, the permanent and partial disability benefit rider provides financial coverage under circumstances in which you are permanently or partially disabled in the event of an accident. Also, you can opt for the terminal illness rider that allows you to get the sum assured in advance in case you are diagnosed with a life-threatening disease.

9. Longer Term Life Cover

10. Return of Premium Option

11. Critical Illness Coverage

1. Increasing Term Plans

2. Decreasing Term Plans

3. Convertible Term Plans

4. Level Term Plans

5. Term Insurance with Return of Premium (TROP)

6. Whole Life Insurance