Finance

Term Insurance With Living Benefits

Why Do You Need Term Insurance With Living Benefits?

Term insurance plans are a valuable financial product for everyone. It offers protection against the death of the policyholder and it is usually more cost-effective in comparison to an endowment plan and offers more extensive coverage for a specified duration.

These plans are surely a good option to protect the family in case the breadwinner dies early. However, the base plan doesn’t offer anything specifically for your survival throughout the policy tenure, which may not be a suitable option for many people.

Fortunately, certain insurance providers provide term insurance benefits for your survival throughout the policy’s tenure with the “Return of Premium” option, which provides you with a refund of the total premiums you’ve paid in the event of your survival.

With such a combined benefit, term insurance becomes an ideal investment option that provides dual benefits at an affordable price. Let’s take a detailed look at the various benefits offered by a term insurance plan that makes it the best bet for you.

Living Benefit of a Term Insurance

Although term plans do not provide you with an option to invest your money in any kind of fund where capital appreciation or depreciation takes place, you may still be able to enjoy various living benefits by investing in a term plan.

Certain insurance companies provide term plans with a return of premium option, which provides you with a complete refund of the total premiums you’ve paid towards the policy in case you survive throughout the policy tenure.

Additionally, with the help of certain riders, you can also gain benefits in the event of total or permanent disability due to an accident, which is technically considered as a living benefit as you haven’t died yet.

Apart from this, a term insurance plan also provides you tax benefits under the Income Tax Act of India. As per section 80C of the act, the premiums paid towards the policy are eligible for a tax deduction of up to Rs. 1.5 Lakhs.

Moreover, the returns assured through the policy are also exempted from taxes as per section 10(10D) of the act. This allows you to save money on taxes and provide the benefit to your dependents in the most effective way.

Death Benefit of a Term Plan

The thing that makes the term plan unique is that it provides adequate insurance coverage at a relatively lower rate than traditional whole life policies. This makes them a much more affordable option to safeguard the future of your family financially.

In the event of your unfortunate death, a term plan will provide a death benefit to your selected nominee to help them manage their daily expenses in your absence without having to financially depend on anyone for the same.

Moreover, certain term insurance plans provide the death benefit payout in a variety of modes as per the financial requirements of your dependents. This includes options like lump-sum, monthly income, part lump-sum part-monthly income with both level and increasing options.

Additional Benefits of Term Plan

  • Highly Affordable Premiums

Term plans, as compared to other kinds of life insurance, have lower premiums. These plans are designed to be short-term, which makes the premium cheaper. Term plans are used to provide financial security for your family in case of your untimely demise and the lower premiums allow you to choose a more extensive cover for added safety. On the other hand, traditional life insurance plans have high premiums that increase for people who need larger sums to ensure their family’s safe financial future.

  • Very Convenient Coverage

Term insurance is the most economical option when it comes to life insurance. You will need to purchase life insurance policies in amounts that are in proportion with the size of your family and your future financial goals if you want to protect yourself and them against death. Unless you can afford to pay the huge rates for whole life insurance, term insurance is the only low-cost option. The preferred coverage amount you should have depended on how much you’re making, what kind of lifestyle risks you have, whether you have family, and if you have any financial goals or liquidity needs for both short- and long-term.

  • Complete Future Financial Security

The important thing about term insurance is that it offers you a sufficiently large sum assured at a low cost. It’s the only type of plan which provides coverage for your life at such an affordable price. It is your best choice if you’re interested in maximizing the safety you can receive at a low cost. While other plans might offer guaranteed returns, periodic money backs, or lifelong annuities, the most important factor is to protect yourself against unexpected eventualities. This provides a complete sense of financial security to your family and dependents at a relatively lower cost.

  • Optional Savings Component

If you choose a term insurance plan with a return of premium option, then you’ll also be able to enjoy the savings component associated with term insurance benefits. With this option in your plan, you’ll be eligible to get back all the premiums you’ve paid towards the policy in case you survive throughout the policy tenure. Although the option isn’t available by default in all term plans, certain insurance companies provide you with the option to enrol for this feature as well.

Final Words

Condensing the many benefits of a term insurance plan into a single paragraph can be hard, but in this article, we’ve done our best to provide you with an easy-to-read overview of what makes term insurance so great. If you have a loved one who depends on you financially, term insurance with living benefits is the best option. In the event of your death, this policy will provide them with enough income to cover their regular monthly expenses for as long as they need it.

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