Term insurance is a category under life insurance that basically offers a death benefit to the insured person’s nominee or beneficiary if the insured dies during the term of the policy. The premiums, in this case, depend on the age and health status of the policyholder.

The premiums can either be paid at regular intervals or all at once. However, no maturity benefit is received if the policyholder stays alive throughout the insurance term. Buying term insurance at a young age is also recommended, as it generally allows for lower premiums and better coverage.

Let’s discover the financial benefits of purchasing term insurance at a young age, including reduced costs, health-related advantages, and protection against inflation.

Age

Health

If the policyholder has a family history of developing certain chronic diseases such as stroke, cancer, diabetes, etc., it can result in higher premiums. Some reputed life insurance companies also consider your family history before approving your term insurance application.

Apart from these two factors, the term insurance also depends on: 

• Gender
• Smoking
• Lifestyle
• Medical History
• Driving Record

Benefits Under Section 80C

As per this section, you get a tax deduction of ₹1.5 lakhs for the premiums you pay for your term insurance plans. The conditions include:

• The yearly premiums should be less than 10% of the total sum assured.
• If the policy is issued before 31 March 2012, this deduction applies if the premiums are less than 20% of the sum assured.
• If the policyholder terminates the policy within two years of its initiation, the policyholder will not receive any of the tax benefits.

Benefits Under Section 80D

If the term insurance comes with a critical illness cover, then the policyholder enjoys a deduction of up to ₹25,000 on premiums under this section. The conditions include:

• Availed for an amount less than ₹25,000.
• If the policy is bought for parents, an additional deduction of ₹25,000 can be obtained.
• If your parents’ age is more than 60, the limit rises up to ₹50,000.

Benefits Under Section 10D

As per this section, if the policyholder dies, the sum of money received on maturity or surrender shall absolutely be tax-free. The bonuses are also exempt as per Section 10D. Two conditions under this section are:

• Applicable only if the premium is less than 10% of the sum assured. 
• If the sum exceeds ₹1,00,000, then the policyholder’s PAN must be produced to apply a TDS of 1%.

Financial future planning is a healthy habit, and everyone must try to teach it in themselves. It will act as the base of all your future goals and aspirations. Even though we cannot predict any upcoming accidents, all we can do is prepare for them.

Hence, buying a term insurance plan will help in:

• Meeting Financial Duties
• Several Payout Options
• Obtaining Tax Benefits
• Having Financial Protection
• Acting as Income Replacement