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What Is Term Insurance
Term insurance is the simplest and purest form of life insurance. It provides financial protection to your family at the most affordable rates. With term insurance, you can get a large amount of life cover (i.e. sum assured) at a relatively low premium rate. The benefit amount is paid out to the nominee in case of death of the person insured during the term of the policy.
If you are wondering about what is term insurance, we are here to help you. Simply put, term life insurance meaning can be regarded as an agreement between the policyholder (insured) and the insurance company, where in case of the policyholder's untimely demise, a specific sum is paid to the insured person's family by the insurance company. You will find that term plans are significant when it comes to long-term financial planning.
Benefits of Term Insurance
Maturity
Any regular term insurance plan wouldn't provide benefits on the policy's maturity. But, lately, many insurance companies have adjusted their term plans to allow a couple of maturity benefits.
Tax
Similar to other insurance products, the applicant can benefit from taxation. Under Section 80(C) and 10 (10D) of the Income Tax Act of 1961, the paid premium amounts are exempt from any kind of income tax.
Death
Upon the death of the insured during the policy's term, the nominees would receive the assured sum. The benefits can be availed only by the nominees registered in the term policy document.
Return Of Premium Option
Term with Return of premium is a type of term insurance that offers a refund of premiums paid to the insured if they outlive the policy term.
Types Of Term Insurance
Return of Premium Plan
This term insurance is designed for the people who expect some returns on the amount of money they invested in purchasing the insurance.
Convertible Term Plan
This term plan offers customers the option to convert their basic term plan into a complete life insurance plan or to invest in an endowment policy.
Increasing Term Insurance
This one is in complete contradiction of decreasing term insurance. In this, the sum assured increases every year.
Decreasing Term Insurance
This term plan has a low premium because the assured sum goes on decreasing as years pass. Such a plan is bought with consideration of any debts to be paid off.
Income Tax Benefits
Under section 80C, premiums that you pay towards a life insurance policy qualify for a deduction up to ?1.5 lakh, while Section 10(10D) makes income on maturity tax-free if the premium is not more than 10% of the sum assured or the sum assured is at le
Term Plans With Riders
A rider is an insurance policy provision that adds benefits to or amends the terms of a basic insurance policy to provide additional coverage.
Term Insurance FAQ Guide
With changing lifestyles, an increase in environmental pollution, and many such Term Life Insurance is a very well-known kind of Pure Life Insurance policy which aims at providing monetary coverage as death benefit in return of premiums charged for a certain time period to the policy's nominee during the term of the policy once the insured life has passed away. Term Insurance tops the list of financial security plans for a family in the absence of the working person(s). Being the simplest and most economical insurance policy out of all, it provides financial security and benefits to a family after the occurrence of an untimely death of its policy holder.
With changing lifestyles, an increase in environmental pollution, and many such When the customer arrives at a decision regarding the policy term along with the coverage amount, the insurance company calculates the premium for the Term Insurance plan taking into account multiple factors such as age, coverage amount, health, term, and so on. The premium remains the same throughout the term of the policy. The applicant can pay the premium at regular intervals or as lump sum together.
With term insurance policy, you can also avail tax exemptions to reduce your tax burden. You can avail tax deduction on your term insurance premium up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961. Not only this, if you opt for critical illness benefits, you can avail tax benefits up to Rs. 25,000 under Section 80D as well.
Now that you know what is term insurance plan, it is of utmost importance to know about what is term insurance premium. Term insurance premium is the amount you pay to the insurance company for the financial coverage.
Documents Required For Term Insurance
- Age- The premium is directly proportional to the age. As death is less likely in young people, they are seen as less of a risk by the insurance providers. So, a 30-year-old person would have to pay a lower premium than a 60-year-old person.
- Gender- Women are charged with lower premiums than men. A lot of scientific research has proven that, on an average, women live five years longer than men.
- Policy- The type of term policy invested in largely affects the premium. To put things into perspective, if an individual is purchasing a long-term life insurance cover then he / she will be charged with premiums for longer time period.
- Medical History- Even if an individual doesn't suffer from a problematic ailment, he/she is required to pay a larger premium on the term insurance if the individual carries a family history of genetic disorders.