Features of Term Insurance
Insurance
Term insurance is a pure protection plan that offers financial coverage in case of an unfortunate incident during the policy term. The primary purpose of a term plan is to provide your loved ones with a financial cushion in your absence. Term insurance offers a high sum assured at relatively affordable costs, enabling you to provide for your family members after you.
Features of term life insurance
Below are some features of term insurance that you must know:
Affordable premiums
A term insurance plan offers high sum assured with affordable premiums, allowing you to safeguard your family's future without budget constraints. The plan's cost-effectiveness makes it accessible to most income groups and professionals.
Easy to buy
Buying a term life insurance plan is fairly easy. All you need to do is select a plan that fulfils your needs, submit basic details and undergo a medical test. You can purchase the plan online from the comfort of your home or office, or visit a branch near you. The online buying process is designed to be smooth and hassle-free.
Term plan with return of premiums
Term insurance plans may also offer a refund of all your premium payments at maturity if you survive the policy term. The plan helps secure your loved ones while offering long-term savings that can help you fulfil your future goals.
Flexibility in paying premiums
Another great feature of term life insurance is that it offers a lot of flexibility for paying premiums. You can make the payment in monthly, quarterly, semi-annually or annually, depending on what best suits your financial situation.
Fixed coverage amount
One of the key features of a term insurance policy is the fixed life cover`. Term insurance provides your loved ones with a fixed sum assured that is chosen by you at the time of purchasing the plan. This assured amount is paid to the nominees in case of an unfortunate event of death during the policy term.
Term duration options
Term insurance offers flexible policy terms, such as 10, 20, 30 years or your whole life. You can select a duration that aligns with your age, professional and personal goals, family's needs and other similar factors.
Additional riders
Term insurance features are not limited to the basic components of the plan. You also have the option to add riders to the base policy. You can choose from different riders as per your individual needs. These riders enhance your coverage amount and can be added at a nominal cost.
Tax benefits
Tax* benefits are one of the lesser-known features of term insurance. The premium paid towards a term life insurance plan can be claimed as deductions subject to conditions prescribed under Section 80C of the Income Tax Act, 1961. Additionally, the payout received by the plan's beneficiary is exempt subject to conditions prescribed under Section 10(10D)* of the Income Tax Act, 1961.
How do term insurance plans work?
Term insurance plans provide financial protection to your loved ones in case something happens to you during the policy term. They typically pay a lump sum or regular instalments to your nominee. Here's a simple breakdown of how they work:
Purchasing the insurance
The first step is buying the policy. You can compare different plans, decide the right sum assured based on your needs, add any riders that suit your needs, like critical illness, permanent disability or accidental death, and list your nominee. Once everything looks good, you can go ahead and purchase the plan.
Regular premium payment
After buying the policy, you need to pay the premiums on time. You can choose to pay them monthly, quarterly, semi-annually or annually. Make sure to pay the premium on time throughout the term of the policy. It is also important to follow the terms and conditions laid out in the policy to ensure your coverage stays active.
Receiving the benefits in return
If an unfortunate event occurs during the policy term, the insurance company pays the sum assured to your nominee, either as a lump sum or in regular instalments, depending on the payout option you selected. If you have opted for a return of premium plan and you outlive the policy term, you will receive back all the premiums you have paid.
Should you consider buying term insurance?
Below are some people who can benefit from purchasing term insurance:
Young families
Term insurance is ideal for young families and allows the primary breadwinner to provide financial protection for the dependents.
People with debt obligations
Term insurance can be a valuable tool if you have debt obligations, such as outstanding loans. The insurance payout can be used to pay off debts and prevent your family members from being burdened with your financial obligations in case of an unfortunate event during the policy term.
Parents
Term insurance can help parents leave a legacy for their children's education and other financial needs in their absence.
Married couples
Term insurance can help the spouse cater to their financial needs and cope with the loss of a loved one. It can be essential for both partners, irrespective of their genders and professions.
Conclusion
Term insurance stands out for its affordability, fixed coverage, flexibility and additional benefits like riders and tax* benefits. However, it is important to assess your personalised insurance needs to ensure your policy's features align with your requirements and select a plan that best suits you.
COMP/DOC/Oct/2025/3010/1425
Frequently Asked Questions
What is term insurance, and what are its benefits?
Term insurance is a pure protection life insurance plan designed to offer financial security to your family in your absence. These plans are affordable and provide a large life cover` at a relatively low premium. They also come with optional riders for comprehensive protection. Plus, you get flexible options for choosing the policy term and how you want to pay your premiums.
What is the scope of term insurance?
Term insurance is a financial safety net that can help your loved ones. It ensures that in your absence, your family has the financial support to manage ongoing expenses, pay off debts and maintain their lifestyle.
Can I add riders later to my term insurance plan?
Yes, in most cases, you can add riders to your existing term plan. However, this depends on the insurance company’s terms and conditions. Some companies may allow adding riders only at the time of policy purchase, while others may offer flexibility later. It is best to clarify this with your insurance provider beforehand.
Which is an important term in insurance?
There are a few key terms you should be familiar with, such as:
- Life cover`, which is the amount your nominee receives if something happens to you.
- Policy term that refers to how long the insurance protection lasts.
- Life insured which is the person whose life is covered under the plan.
- Riders that include optional add-ons for extra protection.
- Inclusions and exclusions that refer to what is and is not covered in your policy.
You must make sure to go through these details and ask the insurer advisors if you have any questions before buying a plan.
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