However, since agents don’t usually upsell these plans because of the small premium and the even smaller commission they stand to receive, most people ignore term policies.
But, quite to the contrary, these plans offer a large sum assured for a relatively low premium. And if the thought of taking out a term policy ever crossed your mind, then here are five basic truths of a term plan that could help you make an informed decision whether or not to invest in one.
Yes, many insurance companies are pushing term insurance plans on their websites. And that too at very reasonable premium rates, rates that can be up to 50% less than the real world cost of a term plan.
Also, since they’re available online, one can browse, compare and buy a policy as and when they please to do so and in the comfort of their homes.
It’s very important to note that term policies offer only death benefit. This means till the tenure of your policy you pay a premium and in case you die before the tenure of the policy your family members will receive the sum assured outlined in the policy.
But if you outlive the tenure of the policy, you stand to receive nothing. However, there are riders that you can add to your plan to provide you a maturity benefit, but these riders will invite a slight hike in your premium.
Since the sum assured under a term plan is quite high, opting for one means you have the peace of mind that, come what may, the financial interest of your loved ones is completely protected.
So in case anything untoward happens to you, your husband or wife will be able to live a financial stable life and your children will have enough money for their education and/or their marriage. Thus, term policies are a reliable way to outsmart life’s twist and turns.
In comparison to most insurance policies out there, term insurance invites the least premium payable. And coupled with a substantial cover amount, it is one of the best ways to take care of your family’s financial wellbeing in case of your untimely death.
Aside from life cover, term insurance also offers the insured a good amount of tax savings. Firstly the premiums paid can be used to avail tax benefits of up to Rs 1, 50,000 under sections 80C of the Income Tax Act of India, 1961. Also the death benefit received by the beneficiaries is also tax free under section 10D of the Income Tax Act of India, 1961.
Keeping in mind these basic truths of term insurance can help you decide to go in for one or not.