Digit Glow Term Life Insurance
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1 Crore coverage starting at just ₹1,309*
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Same-day issuance for healthy individuals
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No hard copies or queues required for claims
What are the Benefits of Buying Term Insurance Plans?
Term Insurance plans are basic life insurance policies with limited validity. The predefined period during which such a policy provides coverage is called 'term'. In case of the policyholder’s unfortunate demise, a term policy pays the assured death benefit to the policy’s beneficiary.
One of the most significant benefits of term insurance plans is their low premium, which makes them a popular choice among policyholders. However, a buyer needs to learn about the advantages and disadvantages of term insurance to make an informed choice.
Table of Contents
What are the Benefits of Buying Term Insurance Plans?
Transparency
Once you go through an insurer’s website, you can learn about all the features and benefits the term plans offer. This helps you make a better decision for your family's financial security.Quick Comparison
The biggest benefit of purchasing term plans online is that you can compare different types of plans and choose one that suits your needs. Comparison is significant as you can simultaneously check the benefits, features, and premiums payable for different plans.Cost-effective
If you purchase a term plan online, you can compare several term insurances and choose the one that offers the most useful features at the lowest price. Therefore, you save a lot of money.Lower Premium
If you purchase a policy online, you get it at lower rates than traditional plans. This is because online term insurance eliminates the need for an insurance advisor. Therefore, the insurance firm saves the cost of commission, and you get the advantage in the form of a reduction in premium.Reduced Time
You can purchase a term plan online faster than traditional term plans. You do not have to visit the office branch multiple times. With just a click of a button, you can compare different term plans and pay for them seamlessly. This has become easier with mobile-friendly websites and applications.No Intermediaries Involved
When buying a term plan online, you must fill out the required information, submit the documents, and complete all the formalities. You do not need to complete the purchase via an agent. This gives you a clear understanding of what you are signing for. Further, you also get a proper understanding of the terms and conditions of the insurance policy.User-friendly
Online term insurance plans come with various options for modifications. You can add some features and track the change in the premium amount in real-time. Further, you can personalise your plan and calculate the premium amount using an online term insurance calculator.
You can check all the combinations available and choose the one that fits your budget and suits your requirements.
Safe and Secure
The insurer websites offer safe payment gateways to complete the payment process without any security hassles.Variety
A wide range of options for these policies make them convenient for most people.Rider Benefits
With some additional costs, you can add several riders to your plan to get more significant benefits out of it. Riders, like critical illness riders, permanent disability riders, etc., cover very relevant risks in the modern world and ensure financial safety for one’s family. Hence, term plans are considered essential.Flexibility
With convertible plans, you can change to other plans when necessary. In addition, it will allow you to improve your savings strategies.Tax Benefits
Policyholders can get tax benefits for paying premiums of term insurance policies. With deductions under Section 80C, you can reduce your taxable income by ₹1.5 lakh and save taxes.Premium Refund
Another noteworthy benefit of term insurance plans is the option to get back the invested premiums. This is applicable to Term Insurance Return of Premium (TROP) plans. This allows you to get a significant sum refunded while simultaneously utilizing the coverage of life insurance.Fixed Return Assurance
Most types of term plans offer pre-declared coverage, which is not affected by inflation or other parameters that affect a country's economy.Minimum Premium
Term insurance plans are popular because they offer lower premiums than whole-life plans. They allow you to get long-term coverage at minimum premium rates.Primary Benefits of Purchasing a Term Insurance Policy Early in Life
Low Premium
Term insurance purchase at a younger age leads to lower premium rates. Insurance companies assess the risk based on age; younger people present less risk and charge significantly lower prices. This ensures that the person acquires a lot of coverage without putting too much pressure on the pocket.Long Coverage Period
Term insurance is cheaper the earlier one purchases it, providing a much longer-term extension to retirement and beyond. As a result, it helps keep the financial needs of one's loved ones covered when children are more important or when paying off the house during critical times of this life.Ample Sum Assured
Younger policyholders can often increase the sum assured while paying less premiums than older people. A higher sum assured ensures adequate financial protection for the deceased's beneficiaries; the most common examples are education expenditures or debt repayment.
Such a sum assured is urgent for a family as they may have financial liabilities that may crop up in time.
Health Benefits
Buying term insurance at an early age generally means that healthier people can obtain coverage without complications or pre-existing conditions exclusions. Younger people tend to have fewer health problems, thus avoiding high premiums or even policy rejection.
Plus, many policies let options convert to permanent insurance later in life, so coverage stays in place as one's health status changes.
What are the Different Types of Term Insurance Plans?
1. Level Term Insurance
A level term is a fixed agreement between the insurance company and the policyholder for a specific tenure. These plans usually have tenures of 10 years, 20 years or higher.2. Decreasing Term Insurance
This type of term insurance plan has a fixed premium, like level term insurance. However, the amount keeps decreasing yearly until the coverage period ends. At the end of the term, the guaranteed amount counts down to zero.3. Convertible Term Insurance
These policies have a clause that allows you to convert them into other policies within the cover period. They are suitable for policyholders who prefer keeping their future options open.4. Return of Premium (TROP) Term Insurance Plan
TROP is a plan where the insured person gets back the premiums he/she paid over the years after the coverage period expires. It is essential to understand that the plan will only return the premiums paid, not the pre-decided cover amount.5. Increasing Term Insurance
In contrast to decreasing term plans, the coverage amount in increasing term plans increases annually until the expiry date. The premium for an insured person remains fixed throughout this term.How Much Term Insurance Cover is Required for You?
For Life Cover of ₹1 Crore for a Non-Smoker, Male, and Female
For a Life Cover of ₹2 Crores for a Non-Smoker, Male and Female
How to Choose the Right Term Insurance?
Asset Evaluation
To buy the right term plan, you must evaluate your assets and opt for an affordable policy based on your asset valuation. This evaluation will help you back up your premiums in a financial emergency.Age-to-Policy Ratio
You should select a term plan based on your current age. For people under 45, the plan should be at least 20 times their annual income. However, for people above that age group, the plan should be 15 times the yearly income. This is not a hard rule, although experts suggest it to optimise the choices while picking a policy.Choice of Riders
It is crucial to customise and add only necessary riders to your plan. Riders benefit a policyholder; however, adding excessive riders may adversely affect the policy.Income Analysis
It is important to analyse your income source for all savings and capital diversification. This means identifying how much you can put aside for your financial security investments. This will shorten your options for term plans and help you choose the right plan.Frequency of Premium
Another thing to consider while purchasing a term insurance plan is the frequency of your premium dates. Estimating this beforehand will help you plan your monthly expenses efficiently.Mode of Purchase
Buying a term plan online or offline makes a huge difference for a policyholder. With access to the internet and technology, it is very convenient to buy a term plan online. However, many people still prefer the option of purchasing a policy offline. It is important to identify which option is more suitable for you.Why Choosing the Right Plan is Important?
It is essential to choose the right plan for you. Each person's lifestyle, net worth, and financial needs are different, as are their insurance needs. You should choose a plan that best fits your needs and benefits your family in case of an emergency.
Furthermore, a term plan should be fine for the policyholder. The insured person should be able to pay their premiums comfortably at their predetermined frequency. Hence, it is important to choose a plan you can afford. Selecting the correct rider for your plan is also crucial in choosing a suitable plan, as these add-ons are extra benefits based on your needs.
FAQs about Term Insurance Benefits
What is the grace period for term insurance?
What is a free look period in term insurance?
Does term insurance offer tax benefits?
What is the advantage of owning term insurance?
What are the benefits of term insurance?
Is term insurance good or not?
How quickly can my term insurance policy get approved after I apply?
Is securing coverage under a term insurance policy possible if I have a pre-existing medical condition?
Is there a waiting period before I can start using the benefits of my term insurance plan?
Can I increase my term insurance coverage after purchasing the policy?
Other Important Term Insurance Guides
Other Important Articles Related to Term Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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