A life insurance term plan is a financial product that can secure your family's future in your absence. It is always viewed as an important investment considering the range of uncertainties that affect personal finances in daily life at the global level.

 In contrast, others consider the limitations and lose on the benefits and financial advantages of the term plans. The ideal perspective is to understand the advantages and limitations of the term insurance and customise them to ensure maximum financial benefits.

Before we get started, let us understand what a term insurance plan means.

What Is A Term Insurance Plan?

A term insurance plan is a life insurance policy that provides a financial death benefit to your family in the event of your unexpected death during the policy tenure. The life insurance providers offer a range of flexible features that help you customise the term insurance policy to your advantage.

Term Plan Advantages

A term insurance policy provides different types of advantages.

• Affordable premiums - A term insurance plan is one of the most affordable life insurance plans. You can even lower the premiums by purchasing the term plan early in life. Insurers consider your health conditions to determine the risk associated with your death. You may not have any pre-existing illness or serious health condition at a younger age. Therefore, the premium for your term plan will reduce considerably.
  
  
• Apt sum assured - A term plan always provides an apt sum assured than other life insurance plans. Also, when you purchase it at a younger age, you can choose a longer policy term that helps you accumulate even an apt sum assured at an affordable rate.
  
  
• Reduce financial burden - The death benefit will help your family manage the financial crisis in your absence. For example, the funds can be used to clear off debts, pay for your child's tuition fees, marriage, etc.
  
  
• Flexible features - You can customise the term insurance policy based on your family's financial needs. For instance, when you save in Tata AIA Life Insurance Plans, you can increase the sum assured at different stages of your life, help your nominee receive the benefit as a regular income, lump sum or as a combination of the two options, etc.,
  
  
• Add-on riders^# - Riders^# are add-on options that help you increase the financial benefit during the policy term. The most common add-on riders^# are the ones that provide financial support to pay for the hospitalisation and medical expenses in case of critical illnesses, terminal illnesses, etc. There are also options to waive off paying premiums in case of total and permanent disabilities.
  
  
• Tax* benefits - The premium you pay and the payouts your family will receive on your term plan will qualify for a tax* deduction and exemption benefit under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
  
  

Term Plan Limitations

While a term plan provides a range of benefits, there are certain limitations of long-term care insurance that you need to know.

• Maturity benefit - Unlike comprehensive life insurance plans that provide a savings and investment benefit, a term plan does not provide a financial benefit at the end of the policy term as a maturity benefit. However, insurers provide an option that provides a refund of the premium amount paid at the end of the policy term. While the option is available at more cost, it provides a savings benefit that you can utilise to clear off your debts or pay for other financial obligations when you survive the policy term.
  
  
• Wealth creation Limitation - One another limitation of insurance is that it does not provide market-linked returns that help in wealth creation. However, considering the market volatility, you must have a specific fund safe from such financial inconsistencies to secure it for your family's future well-being. And that is the sole purpose of term plans.
  
  
• Purchasing term plans at a later age can be costly- Well, the cost of term plans will increase as you get older, considering the health issues that might raise the probability of your death risk. However, if you have a dependent family later in life, considering its benefits, it is important to purchase a term plan even at more cost.
  
  

L&C/Advt/2022/Sep/2224