What Are Pure Term Insurance Plans?
If you’re looking for an affordable and fool-proof way to secure the future of your family in case something unexpected and untoward were to happen to you, a life insurance cover is one of the preferred solution for your needs. There is a plethora of choices available in the market today, and people looking for life insurance have a variety of policies and plans to choose from. Right from the level of coverage and the premium payment options to the additional riders and pay-out benefits, there are varied choices to make.
When faced with these choices, you may often overlook the most basic kind of life cover, which is term insurance. If you wish to buy term insurance to secure the financial future of your family, it is important to understand the basics of this kind of life cover. So, let us get to know more about what a pure term insurance plan is.
What is a pure term insurance plan?
A pure term plan is a kind of insurance that offers the policyholder a life cover alone, in return for which the insurance company charges a premium. Being the purest form of life insurance, a pure term insurance plan not only offers coverage to the life assured, but it also ensures the financial security of the life assured’s family. Pure term plans make sure that your family is capable of achieving their life goals, even in your absence. The idea behind term insurance is to provide financial protection to the families of the life assured.
Here is an example to understand how pure term insurance works. Assume that a policyholder has purchased a term insurance cover of Rs. 1 crore. Say the tenure of the policy is around 20 years. If the policyholder passes away at some point within those 20 years, the insurance company will then pay out the entire sum of Rs. 1 crore to the nominee of the policyholder.
On the other hand, if the policyholder survives the policy term of 20 years, the plan will expire and no benefits will be paid out to either the policyholder or his/her dependents. This is how a pure term plan works.
Now that you know how this life cover function, you may want to learn more about their features and benefits before you go ahead and buy term insurance for yourself. Let us look at these details.
Features and benefits of pure term insurance plans
Pure term insurance plans offer many beneficial features. Get to know more about these reasons to buy term insurance here –
1. High coverage at affordable premiums
Pure term plans are more affordable than other kinds of life insurance plans. In return for low premiums, they offer a high life cover, thereby ensuring that you can secure your family’s financial future. By combining high coverage with low premiums, pure term plans are the most affordable products to offer financial protection to your loved ones.
2. Easy purchase options
Purchasing a pure term plan is easy. You can do so through online channels or offline modes. To buy term insurance online, you just need to visit the website of the insurance company and submit your application along with necessary documents as per the required procedure. To buy term insurance offline, you can approach an intermediary like an insurance agent.
3. Term insurance tax benefits
Term plans also offer tax benefits to the policyholder. Under Section 80C of the Income Tax Act, 1961, the premium paid for pure term life insurance is eligible for deduction. Additionally, the death benefit is also eligible for term insurance tax benefits as per Section 10 (10D) of the Income Tax Act, 1961. The above deductions and exemptions are subject to the provisions mentioned in the Income Tax Act, 1961, as amended from time to time.
Factors to consider that will help you choose the right term insurance plan
Before buying a pure term plan, you need to consider the following factors, so you can choose the right plan for yourself and your family –
• Your family’s needs and life goals, so you can purchase a cover that is adequate to meet those requirements.
• Your debts and liabilities, so the cover you buy can be sufficient to help your family meet those obligations in your absence.
• The claim settlement ratio of the insurer, so you can be rest assured that your nominees’ claim would be settled on time.
• The inflation factor, because you will need to ensure that the cover is large enough to help your family financially several years down the line.
Now that you know what pure term insurance plans are and how their beneficial features are important, you will understand why term plans are useful products for people who want to secure their family’s financial future. In addition to the benefits to the family, the policyholder also enjoys tax benefits on premium paid.
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