Reasons Why You Should Not Underrate Term Insurance

Common Advantages of Term Insurance Policies

Having Term Insurance for the financial protection of your loved ones is essential. These policies may offer coverage at an affordable price, making them available to a number of individuals with an average income. By adding a options known as add-ons or riders, you can enhance your coverage ensuring a better financial future for your family in your absence. Term Insurancemay also help your family in managing daily expenses if your income ceases, providing them with financial support during challenging times. Some individuals also prefer Term Insurance due to potential tax benefits offered under the Income Tax Act, 1961. Many choose it because it is simple and easy to understand.

Coverage against uncertainties

Term Insurance is designed to provide financial support to the family if the individual covered under the policy passes away during the policy term as sum assured. This money is paid to the individual chosen by the policyholder as the nominee.

• Thismoney can help the family to managedailyexpenses like food, rent, or bills.
• It can also helpin settling outstanding loans, such as a home loan or a personal loan.
• This may also be usedto plan for majorexpenses such as education or a wedding.

The amount of coverage and the duration of the policy can be chosen by an individual buying the plan. This allows flexibility to cater to individual needs. For example, an individual with a substantial loan amount may opt for a higher coverage which remains effective throughout the term of the policy. This may bring peace of mind as the Families may feel secure knowing about the financial assistance in case of unforeseen events.

This type of policy can be beneficial, especially when there is a sole breadwinner for the whole family. The proceeds from the policy can help the family stay strong financially during difficult times.

Benefit of additional riders

Term Insurance plans may allow optional extra add-on along with base policy known as riders,. You can choose them if you want additional coverage. These riders may provide you with wider coverage by including circumstances or benefits that are not included in the base plan.

Some of the most commonly purchased riders are:

• An accidental death benefit rider that provides additional sum assured if the life assured passes away due to an accident.
• Critical illness protection riderprovides additional sum assured if the life assured gets a diagnosed with any covered illness . This amount can help for treatments or daily expenses.
• Accidental total or permanent Disability rider may support the life assured with additional sum assured in case of partial or permanent disability due to accident.

 

Each rider offers distinctive benefit. Riders can be added while buying the plan. Others may be added later, based on the insurance policy termsand conditions. Many individuals opt for riders to get obtain broader protection under a single policy.

Tax Benefits

Term Insurance plans offer tax benefits. Premiums paid can be claimed under Section 80C of the Income Tax Act, up to ₹1.5 lakh in a year under old tax regime. To get this, the premium should usually be within 10% of the sum assured. The death benefit is often tax-free under Section 10(10D) if conditions are met. If the plan includes health riders, their premiums may also be eligible for a deduction under Section 80D under old tax regime. These tax benefits under Section 80Cand 80D apply under old tax regime only.

FAQs

1. Why would someone want decreasing term life insurance?

Some people choose decreasing Term Insurance because their money needs may decrease over time. For example, they may make a plan to cover a home loan or a personal loan. As the loan amount gets smaller, the cover can also be reduced. These plans may cost less than level term plans. It can suit those who only want cover for a specific debt.

2. What are the reasons for Term Insurance claim rejection?

A claim may get rejected if the details shared during the purchase are not correct. Giving wrong facts about age, health, or habits may cause this rejection. Missing premium payments can also lead to policy lapse. In such cases, claims may not be accepted. Rejections also happen if the claim is made during the waiting period. Reading the policy terms and conditions and sharing full and true information at the time of purchase may help avoid such problems.

3. Why don't people buy Term Insurance?

Some people do not buy Term Insurance because they may not understand how it works. Others may think they do not need it right now. \ Budget limits may also stop them.