We are primarily and to varying degrees concerned about two important factors of life: our family and our money. Although life demands we choose between dichotomies, when it comes to term life insurance, we can secure both these crucial facets of life. When you are worried about what would happen to your family when you are not around, you will be happy to discover the benefits of term insurance that would address your financial concerns. Term life insurance is often considered a basic financial necessity in today’s uncertain world. They have numerous benefits and come with customisable features that acknowledge unforeseen scenarios that could impair your financial well-being, and shield you from them.

What is a Term Life Insurance Policy?
 

Before we enlist the benefits of term life insurance, we must discover what it means. A type of life insurance policy, term insurance provides financial cover for a pre-defined “term”. If the policyholder were to pass away during this ‘’ term’’, the nominee would receive a death benefit (provided the insurance is in force) so that they can continue with their life without having to worry about finances.
 

Term life insurance is of great benefit for someone who is on a strict budget and yet wishes to secure the financial future of his/her family. Generally, the term life insurance duration ranges between five to 40 years, and the insurer can opt for the term depending on their financial preferences.
 

To avail of a term life insurance policy, companies charge policyholders a premium amount, based on the policyholder’s health, age, and life expectancy, which is verified through a medical examination and an analysis of the family’s medical history. The premiums are fixed and are paid by the insurer for the length of the term.
 

If the insurer passes away when the policy is active, the nominee receives a death benefit. On the other hand, if the policyholder survives the term, no benefit is payable in a pure risk policy. However, the insurer can extend the insurance policy (if possible) or the insured can buy a new policy altogether, but the new premium will again be decided based on the policyholder’s age and health at the time of renewal.
 

Types of Term Life Insurance
 

To make the most of a term life insurance policy and purchase one that offers maximum benefits, it is important to know of the different types available:
 

• Level Term Insurance: This is a basic term insurance plan that is most commonly opted for. Here, the assured sum remains fixed throughout the policy, and the death benefit is paid to the nominee if the insured passes away.

   

• Term Insurance with Return of Premium² (TROP): This is term insurance with Return of Premium² benefit, wherein the sum of the total premium paid will be returned to the insurer if they survive the policy.

   

• Increasing Term Insurance: In this plan the sum assured increases on an annual basis, while retaining the same value of the premium, to ensure that the sum assured keeps up with the rising inflation and financial liabilities. However, the premiums paid for this policy are usually more than level cover.

   

• Decreasing Term Insurance: Unlike the above, for this policy, the sum assured keeps decreasing every year to match the falling insurance requirements of the life insured. This plan is suited for those who have taken a significant personal or home loan and are looking to insure their debts with a life insurance cover that matches the loan amount.

   

• Convertible Term Plan: These plans come with the option of being able to convert into any other type of plan at a future date.

   

What are the Advantages of Term Life Insurance?
 

Term life insurance is crucial to financial planning, especially in the current uncertain scenario. Apart from the financial security and the death benefit, there are numerous other advantages of purchasing a life insurance policy:
 

• More benefit at a low premium: One of its prime benefits include that the term life insurance plan is the most pocket-friendly insurance, especially when compared to the other life insurance policies. If you are further looking to lesser the cost of insurance, the golden tip is to purchase it early. This is because when you are young and healthy, the premiums paid are much lesser than when you are older, and your health is not in its prime. Purchasing a term life insurance online is also beneficial as you can seamlessly make a purchase from the comfort of your house. It is also easier to compare multiple plans of term insurance online.

   

• Easy to understand: The popularity of term life insurance is owing to its ease of understanding. It is a pure life cover focusing on providing your nominee with a death benefit if you were to pass away while it is still in force. It does not have an investment element that would require a deeper understanding of the market structure. One simply needs to pay the premiums on time for a fixed duration to avail of the benefits.

   

• Tax^* benefits: While the primary reason to purchase term life insurance is to secure your family's financial future, buying term life insurance comes with a host of tax^* benefits. The term plan tax benefit is listed under the Income Tax Act that the insurer can avail:

   

  • Section 80C: This section allows the insurer to claim a deduction of up to ₹1.5 Lakh for specified investments and purchases, including the premium that is paid towards a term life insurance plan.

     

  • Section 80D: As per this section, an insurer can claim a deduction of up to ₹25,000 for health-related riders, such as a critical illness rider.

     

  • Section 10 (10D): When opting for a term life insurance, this benefit can be claimed while claiming the payout wherein the entire amount is exempted from taxes.

     

• Flexibility in premium payments: The premium for a term life insurance can be paid monthly, quarterly, half-yearly or yearly depending on your cash flow requirements. Some plans even allow the option of paying the entire premium at once to avoid the hassle of missed payments.

   

• Customisable coverage options: When the policyholder opts for an insurance coverage rider^#, they can fill in the gaps that come with a regular term life insurance plan. These riders can protect your family against all possible exigencies:

   

  • Critical illness rider^#: If the insurer is diagnosed with any critical illness that is enlisted in the insurance document, then there is an option to get a lumpsum payout. This could be used to pay for medical treatments, which in turn will help keep the savings intact.

     

  • Accidental death benefit rider^#: If the policyholder were to meet with a fatal accident, his/her family receives an extra sum over the assured base sum.

     

  • Waiver of premium: In the event of the occurrence of the covered risk as enlisted in the contract of the insurance rider, the premium payment is waived off, and the life cover continues until the end of the term. It also ensures that the policy remains active despite the inability to pay for the premiums.

     

  • Income benefit rider^#: To ensure that your family receives a regular income to support the regular expenses/needs OR to replace the loss of income.
    
     

Term Life Insurance Plans by Tata AIA^*
 

Tata AIA brings you a range of Term Insurance plans. Standing true to our value of ‘Rakshakaran’, i.e., protection, the Tata AIA Term Life Insurance plans offers wide insurance coverage, seamless premium payment modes, multiple death benefit payout modes.

Under our term insurance segment,  we provide some plans:
 

Some major features of the plans include:

1. Flexibility to choose from multiple coverage options, such as Life Option (basic term plan cover), Life Plus Option (term plan with return of premium), Life Income (term plan with income benefit) and Credit Protect (term plan to cover debt liabilities).
   
   
2. Option to avail life insurance coverage up to 100 years of age
   
   
3. Life Stage Benefit that allows increasing cover at important stages of life
   
   
4. Inbuilt Payor Accelerator Benefit that advances 50% sum assured on diagnosis of a terminal illness.
    

And, so much more!
 

Apart from these plan-specific features, avail of other benefits like:

• Ability to enhance insurance coverage with a choice of riders#.
• Tax benefits as per the prevailing tax guidelines.
• Lower premiums for non-smokers and female policyholders.
• Flexible premium payment modes.
   

To Conclude
 

The numerous term insurance benefits make them valuable financial instruments. If you are looking to provide a financial cushion for your family at a reasonable cost, then term life insurance is the apt option available.

 

L&C/Advt/2023/Mar/0783