What are the features and benefits of Term Insurance?

21 Feb 2022|

1 min read |

by ICICI Securities Team

Introduction

Term Insurance is a Life Insurance Policy designed to secure the future of your loved ones when you are no longer around to provide funding for them. A Term Policy is one of the basic policies that everyone should include in their financial planning. The relatively low premium and high coverage make Term Insurance an attractive plan for meeting the future family goals in case of the untimely death of the earning member.

For example, if someone buys Term Insurance where the sum assured is Rs. 2 crore for 30 years, this amount gets paid to the nominee as the lump sum amount if the policyholder passes away during the policy period. Here are the Term Insurance benefits and features that make it worth the investment:

Premiums are affordable

Premium associated with a Term Policy is more affordable compared to other insurance in the market. The premiums go as low as Rs. 400 monthly. Moreover, the earlier you buy your Term Insurance, the lower the premium.

Tax relief

Premium paid towards Term Insurance enjoys tax benefit under section 80C of the Income Tax Act. Moreover, the nominees who receive the lump sum after the policyholder’s death are exempted from taxes subject to Section 10 (10D) of the Income Tax Act.

Add riders

If you feel your basic Term Insurance does not offer enough coverage, you can always pay a nominal additional premium and opt for riders to enhance the same. Most insurance companies provide riders for Critical Illness cover where the policyholder receives the lump sum amount once diagnosed with a critical illness. Some insurers also permit waiver of premium rider, which exempts the policyholder from paying premiums if diagnosed with a critical disease or in the event of any disability.

Nominees receive the amount monthly

If you opt for a fixed monthly income Term Insurance, the nominees receive the entire insured amount as a monthly payment over a specific duration. For instance, if the sum insured is Rs. 2 crore, the insurance company pays a fixed income of Rs. 50,000 over 10 years. This is especially helpful to ensure the better financial security of your nominees if they do not have a steady income source.

Enjoy premium return option

This allows you to enjoy the maturity benefit of your Term Policy. While you may have to pay a higher premium, you also receive the total amount if you survive the policy period.

Whenever you are choosing Term Insurance, exercise extreme caution. After all, you want to protect the future of your family during emergencies. Read the policy document carefully and opt for an insurance provider with a strong market reputation and a good claim settlement ratio.

Disclaimer

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