For many people, the idea of having a term life policy may take a backseat in favour of other financial obligations. They may keep pushing it further down the list of priorities till situations involving raising a family or facing an emergency make them realise how valuable a term life policy could be.
The more you age, the higher the term insurance premiums you are required to pay. Therefore, it is better to buy a term plan as soon as you can. It may help you get better premium rates and a longer term duration. However, if you are still unsure whether term plans are the right option, here are five term insurance benefits that may help you decide.
- Lower Premiums
Among all the various life insurance options available, term insurance tends to offer some of the lowest premiums. These premiums depend on the age of the life assured, the type of policy, and other factors. The value of the premiums may start at lesser than Rs. 1000 per month. Depending on the policy option you choose, these may increase gradually over the years. You can choose your premium frequency while purchasing the plan.
Premiums are relatively lower for younger customers, non-smokers, and females. They also tend to be lower when buying a plan online rather than offline. This may vary across policy providers. It is best to confirm these details with your policy provider or use a term plan premium calculator for your desired policy.
- Additional Covers and Benefits
In addition to death benefit, term plans may offer several more benefits or riders such as terminal illness benefit, accidental death benefit rider, accidental total and permanent disability rider, and more.
These additional riders or benefits help the customer put their policy to use in case of events other than death. For example, a terminal illness benefit can help you cover hospital and/or healthcare costs if you are ever diagnosed with a fatal condition. This eases the financial worries of your family while you can focus on managing your ailment better.
- Multiple Pay-out Options
Multiple pay-out options refer to the ways in which the nominees or the beneficiaries can avail of the death benefit. Most policies tend to offer death benefit pay-outs in lump sum as a default. However, there may be options with some term insurance policies which would allow nominees to get monthly income plus a lump sum payment from the death benefit.
For some customers, a lump sum death benefit can be of much help. But if the life assured is leaving behind liabilities such as loans, or the educational needs of their kids, a regular pay-out at monthly or quarterly frequencies can aid the nominee to manage the money better.
- Tax Benefits
As with most life insurance policies, term insurance plans also offer tax benefits. You can claim income tax benefits on the premiums you pay for the policy, as well as the death benefit pay-outs that your nominees can expect. Please consult your policy provider for tax benefit details on respective policies.
- Return of Premium Option
Many customers believe that term insurance is not worth their time and money because such plans offer nothing more than death benefits. However, this is not true in all cases. If you want to have some returns on your term plans, you can opt for policies with the ‘return of premium’ option.
TROPs, or term plans with return of premium, is a type of term plan that will return the premium amount that you have put into the plan over the years if the plan reaches maturity and no death claims are made. Since these plans offer some returns other than death benefit, the premiums may be relatively higher.
There are various reasons, including the ones stated above, to buy a term insurance policy. However, the simplest reason to do so is to extend financial support to your family in the event of your death. Although it is advisable to buy one earlier in life, remember that it is never too late for a term plan.