Who can predict life? It is always more difficult in case one is the sole bread-earner of any family. It also becomes crucial to financially safeguard your family in such scenarios. How do you ensure this? It is possible if you choose term life insurance for this purpose. What is it all about? Let us take a closer look below.
What Term Life Insurance Stands For
It is basically pure life coverage without any investment/savings component. You pay a premium for a certain time, and in return, the insurer will cover your life in this duration. If you unfortunately pass away in this period, then your nominee will receive what is called a sum assured or death benefit payout.
Basic Ramifications of Term Plans
Let us take a look at the basic functioning and features of term life insurance plans.
- Tenures may vary for these policies. They are usually between 5-30 years, based on what you prefer.
- The amount of the premium stays fixed and you may pay the same each month, quarter, or even year, depending on your convenience.
- Factors influencing the final premium amount include your lifestyle and habits, medical condition, age, etc. Younger people usually have a chance of paying lower premiums for relatively higher coverage.
- The amount that your nominee receives can be in the form of a lump sum, monthly income, or even a mixture of both as per your preferences.
- Payouts are not given if you survive the term policy tenure.
- Tax deductions are also available on the premium payments that you make under Section 80C. The sum assured is also tax-exempted in the hands of your nominees.
Why Term Life Insurance is Worth It
- Your premium payments will be affordable for a higher coverage amount.
- These amounts are usually lower than many other types of policies.
- You can keep increasing your coverage periodically due to evolving needs.
- You can flexibly adjust the policy as per your specifications and also integrate riders to widen the scope of coverage accordingly.
Comparing Term Plans with Other Policy Types
Here is a table that gives you a brief comparison of term plans with various other kinds of policies that are available in the market today.
| Type of Insurance | Term | Maturity benefits | Death Benefits |
| Term Life Insurance | Typically, 5 to 30 years | No maturity benefits with basic term life insurance | Guaranteed death benefit |
| Whole Life Insurance | Up to 100 years | Rare, but some plans many offer | Guaranteed death benefit |
| Endowment/Money back Policies | Usually maximum is around 20 to 25 years | Assured maturity benefit given along with bonus payout with some plans | Guaranteed death benefit |
Signing Off
Term life insurance is a crucial aspect of financial planning. It will help you affordably and simply ensure the financial well-being of your loved ones, even in your absence. It is all the more important, considering how unpredictable life is, particularly in the current scenario.
