What are the benefits of term life insurance?

Posted by somesh mane on October 23rd, 2018

Taking the important decision to secure your family’s future is one of the biggest challenges for anyone. The most precious thing a man can do to his family is to secure their future even when he is not alive and the best way to show this gesture is to start investing in a term life insurance. Insurance is your best partner that provides financial coverage to the beneficiary of the insured person. Term insurance policy is the most economical way to secure one's family in case of death of bread earner. But before putting your money in this policy one must research in detail about what is term insurance.

A term insurance policy is a pure life insurance and helps your family meet their financial need in your absence. An insurance company offers financial coverage to the policyholder for a specific time period and in case of death of an insured individual, the beneficiary can receive the death benefits. Term life insurance provides the highest life insurance coverage in minimum premiums during the plan period.

This insurance policy is not worth ignoring. Make your family financially independent in the event of any unforeseen situation and help them bear your responsibility and liability in your absence. Along with making your family financially independent, tax benefits and services it offers is worth your precious savings. There are multiple benefits of investing your money and if you are still not convinced with the benefits of term life insurance these benefits are described elaborately below:

1. Lowest premiums:  The premium of life term policy is lowest as compared to other cash value policies. The premiums are fixed and do not change over the course of policy. Though premium amount may vary depending on various factors such as age and health suppose a person who smokes, drinks or consumes alcohol will pay a higher premium as compared to another person who doesn’t, but still it is less expensive than permanent or whole life policy. What is Term insurance gives the benefit of acquiring the highest death benefit at lowest premium outlay when the policy is first issued.
2. Easy to compare: Term life policy is simple and easy to understand. You can easily compare term life insurance on the basis of price as they are basically the same and easy to understand. This term life insurance is inviting great competition than for cash value policies. Less research and no hidden information leads to least level of risk. Term life insurance is rapidly gaining popularity and people are opting for these clear and not so risky investment.
3. Convertibility:  Many Term life insurance plans have a very essential feature ‘convertibility’ that attracts consumers. Convertibility allows you to convert your term life policy into an endowment policy with a reduced sum assured. This feature offered by term life insurance policy is termed as the biggest benefit that comes along with the policy and attracts great competition in the market.
4. Tax benefits: It is often believed that only in endowment type insurance policies, the premium paid is comparatively higher than term insurance. Thus you can claim tax benefits u/s 80C of the Income Tax Act. But this is not entirely true; premium paid for term insurance is also eligible for tax benefits u/s 80C. Despite lowest premiums, the difference in premium between term and endowment can further be invested in some tax-efficient schemes that offer similar tax breaks as offered by an endowment plan. The death benefit proceeds are even exempted from taxes. Thus, break this myth of tax benefits and invest your money in this tax-saving insurance policies that not only secures your family’s future but gives you tax benefits similar to endowment plans.
5. Simplicity: Term insurance plans are easy to understand when compared to other insurance policies. Cash value policies divide the premium into risk cover cost and the amount invested as savings on his behalf. It gets complicated for an investor to keep the track as there are many rules that govern these cash value policies such as the size of your cash value savings, repayment of loans and many more. Planning financial goals with cash value policies get tougher for policyholder, whereas term insurance policies are the simplest form of investment. Here, you pay your premium and get insurance cover for the time chosen.
6. Flexibility: Term insurance policy is a flexible area of investment and offers amazing services. Despite death benefits, this term insurance policy takes care of your family in case of any disability or critical illness. You can get a part of the amount when diagnosed with any critical illness. Your family will receive an amount in the situation of sudden death or an additional sum insured in case if it was an accidental death. Term insurance is an opportunity that gives financial stability to the family and lets them live with pride even after losing their bread earner. These features not only gives you a solid reason to invest your money in these term insurance policy, but also assures you that your family’s future is secure even if you are not with them.

Life insurance is the superior form of saving for future and assuring a secured future for your family even in your absence. It is an insurance that stays beyond the life of the insurer which makes this insurance policy one of the most amazing ways to invest your precious income. Life insurance policy is basically a payment of fixed price which is supposed to be paid annually until the term is finished. If you die during the term the nominee or beneficiaries of your policy will receive the value of the policy and if you don’t die during the term, then there is no payout. So, do not underestimate the importance of the life term insurance and opt for a brighter and financial independent future for you and your family after all the happiness of your family is your priority. Let your family live with pride even after you are gone and invest in these life term policies today. But invest only after understanding and researching on every aspect of this insurance policy.