What is term insurance? What are the benefits of term insurance?
January 10, 2019
Not all of us are aware of how beneficial term insurance is; and some of us feel this to be too complex to understand. Few of us are of the feeling that they are hale and hearty, and nothing can happen to them. But are you actually prepared for the sudden knock of death? Have you secured your family’s future? Prepare now! Ensure your family’s security from the financial turmoil that they may have to face in your absence.
Term insurance is one such comprehensive financial support that can provide your family with all the well-being even after your demise. Before we start with the benefits that you can draw from this type of insurance, let us first know what term insurance is.
What is Term Insurance?
Term insurance which is also known as pure protection plans are basic insurance plans which provide life coverage for the policyholder for a certain period. If the insured or the policyholder dies in the term period or when the policy is active, the entire amount is paid to the nominee. This covers a high amount of insurance cover at a relatively low premium, which can be paid as a lump sum or on a regular basis depending upon the policy that you choose.
On the death of the policyholder, the nominee is liable to get an amount that is agreed upon; also known as the ‘Sum Assured’ according to the provisions of the plan.
Now, let’s look for the different benefits of term life insurance that one can enjoy.
Low premium and high coverage-
This is supposed to be one of the major perks of term insurance as the cover for insurance is very high as compared to the term insurance premium that is paid. Moreover, if the insurance is bought at a younger age, the term insurance rates are even lower. For example, with just a premium of INR 17 per day, a person can earn term life insurance coverage of up to 1 Crore.
The premiums that are paid for term life insurance policy are exempted from tax to a maximum of 1.5 lakh under Section 80C of the Income Tax Act, 1961. The amount that the beneficiaries receive in hand in case of the unfortunate death of the insured is also tax free under Section 10(10D) of the Income Tax Act.
Cover against disability and critical illness-
Few term insurances like iProtect Smart also provide coverage for disability or critical illness. By adding a little amount to your premium, you can get a lump sum on your first diagnosis of any critical illness. In case of permanent and total disability, the insurance company pays your premiums if you are unable to pay them so that your life cover does not end.
Additional security benefits:
In case of accidental death term, insurance plans provide a double payout to the family of the deceased. For example, if the insurance has a life cover of 1 Crore, in case of accidental death the family will be liable to get a payment of 2 Crore.
Term life insurance plans are simple when compared to any other insurance plans. You can simply choose the term and pay the premium. Assured sum is given in case of death of the insured during the time period. You can also browse for different types of life insurance cover that can fit in with your requirements. While doing so, make sure to choose a plan which can help keep your family financially secure in your absence.
The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.