A pure term policy is a life insurance cover in its essential form. If an unfortunate event leads to the absence of the term policyholder during the policy tenure, the insurance provider offers the death benefit to the nominees. A term policy does not provide any maturity benefit. It offers a high cover at affordable pricing compared to other life insurance policies. When you buy term insurance, they come with many advantages and highlights. Read on to learn more about them.
Benefits and features of a term insurance policy
- Multiple options
A term insurance policy comes in two different types, single and joint. If you are unmarried, it will make more sense to purchase a policy only for yourself. However, married couples can save money on joint plans and get more effective protection.
- Low price, high return
If you are looking for a life insurance policy to protect the financial needs of your dependents, a term plan is the most suitable option. It offers a considerable cover for a price lower than most other life policies. If you are not certain about how much cover you need, opt for one that is at least 10 times your yearly income.
- Death benefit T
The death benefit is the sum assured that the insurer pays to the nominees when they make a successful claim. The insurance provider and policyholder decide on the death benefit value during policy initiation. However, the insurer pays the sum assured only if the reason for death is included in the policy terms. The exclusions are death due to intoxication, suicide, terrorism, war, and risky activities, among other reasons.
- Flexibility in premium payment
Term insurance plans in India come with various premium payment options. As per your convenience, you can choose from single, limited, and regular payment options. Further, when paying regular or limited premiums, you can do so monthly, quarterly, semi-annually, or annually as per your convenience.
- Tax benefits
As per Section 80C of the Income Tax Act, 1961, you can get a yearly tax deduction of up to INR 1.5 lakh on the premium paid. Additionally, your nominees are entitled to receive a tax-exempted death benefit under Section 10 (10D) of the Act.
How to choose the right term plan
Selecting the most appropriate term plan essentially comes down to finding a trustworthy insurance provider and purchasing the policy that matches your expectations. Here are some suggestions that will help you:
- Assess the credibility
A term policy can only help if you purchase it from a trustworthy insurer. The best way to look for one is to go online and read reviews. You can even find their ratings on the Internet. A reliable insurer guarantees that they will settle every legitimate policy claim application.
- Review the claim settlement ratio
The claim settlement ratio is the percentage of claim an insurer settles from the total claim applications received each year. A higher ratio suggests that the insurer settles every genuine claim. You can find the ratio online.
- Ask for a quote
Before buying a policy, ask for an estimate from the insurer. This will help you determine the cost of the policy, depending on your income, age, and lifestyle. You can also use a term plan calculator to get a better idea.
- Go through the terms and conditions properly
Every life insurance policy comes with specific terms and conditions. The insurers mention the inclusions, exclusions, and other necessary information regarding the policy. It is vital that you read the policy document thoroughly before finalizing the purchase.
Once you go through the checklist and find a satisfactory policy, buy a term insurance plan of your choice online. Every reputed insurance company has its website, which you can access to apply for the preferred term plan.