A must have in today’s times; Term Plans help provide the needed protection to our dependents in cases of any uncertainties. A term plan is an insurance policy that provides protection for a definite period. In the event of the death of the insured, the term plan pays a sum assured to the beneficiaries of the insured. In case the policy holder survives the policy term, a term insurance does not provide any survival or maturity benefits. However, certain companies offer term plans that pay back the premiums paid as per the terms and conditions, if the policy holder survives the tenure.
HOW IS A TERM PLAN USEFUL IN MODERN TIMES?
In these modern times, there are several reasons as to why one must avail term insurance. Some of the important reasons for investing in term insurance are mentioned below:
- Financial Security – Best Term Plans build a safety net and make provision for the financial security of the policyholder’s family.
- Helps in dealing with debt – Terms plans cover any financial liabilities in the event of your death. The sum assured can cover any outstanding debt such as home loan, car loan, personal loan and so on
- Helps achieve long term goals and also supplements retirement goals – Since the money is invested for a long duration, it helps achieve your long term goals like buying a home or planning for retirement.
- Takes care of your business – Some insurance policies take care of the business as well. A business partner can purchase your share of the business without any hassles. The payout will go to the deceased partners nominees
In today’s fast-paced environment we need some stability and simplicity and Term Plans provide not only that, but much more. Some benefits offered by terms plans are given below:
- Financial security – Pure terms plans are not an investment option. They are just a means to secure the lives of your family in the event of your death.
- Flexibility – Most of the term plans offer the option of buying the policy online or offline.
- Low premium – The premium for a terms plan is lower compared to other insurance plans
- Greater returns – The benefits received are much more than the sum invested, resulting in higher return benefits without the trouble to manage investment funds.
- Sufficient coverage – It provides the option of choosing the assured sum under term policies emphasising sufficient coverage.
- Policy Term – In this case coverage is offered for a fixed term whereby your family is financially protected, thus allowing you to retire comfortably.
- Low Claim Rejection – Policies active for more than 10 years offer a lower claim rejection.
- Low Brokerage – An online plan allows you to pay no broker fees compared to offline policies which involve paying a broker commission.
- Tax Benefits – The premiums paid towards a term plan is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. The death benefit received by the nominee is eligible for tax deduction under section 10.
- Riders – Term plans come with several riders that provide additional benefit at a nominal cost
TERM PLANS GENERATING AND BOOSTING HAPPINESS
A necessity for every individual, they are the only type of insurance plans designed solely for protection purposes. The plans present unique benefits such as:
- High Sum Assured – The maximum amount of sum assured under a term plan is limitless. Upon fulfilling the criteria of the company, this benefit can be availed. Plans are chosen based on your family’s lifestyle expenses and thus provide no maximum limit.
- Lowest Premiums – Easily affordable.
- Securing Family – In the absence of the policyholder – the bread earner of the family, term plans pay the covered amount to his/her family thereby ensuring the financial security of the family.
- Safeguarding against Liabilities – In absence of the policyholder, the term plan helps the dependents in managing the financial problems that could arise out of liabilities such as loan on a new home or car.
- Term plans are beneficial to support in cases of nuclear families where the dependents of the policyholder are less.
- Term plans take care of your family in case of any accidental disability or critical illness.
- Term plans provide additional sum insured in case of accidental death.
- Survival Benefits – Standard term plans do not provide any survival benefits. However, plans are available with survival benefits. Called Term Return of Premium (TROP), the term plans refund the premium amount at the end of the tenure, if the policyholder survives the period. Such plans provide a saving as well as insurance.
With the fast-paced environment and growing expenses, term plans are the best investment that one could make for themselves as well for their families. After all, families are everything.