A term insurance policy is the most basic and simplest life insurance product. It is a life insurance type that many insurance experts and financial gurus recommend adding to one’s investment portfolio because it provides a high scope of coverage at affordable prices.
While term insurance plans were always popular, their demand increased after the onset of COVID-19. Because the pandemic took away many lives, it left families of the dead in emotional and financial struggle. Many people realise how important it is to secure their loved ones, especially in their absence. This is where term insurance, life insurance, and other forms of insurance came into play.
Here are things that make term insurance a good purchase in 2023:
- Suitable sum assured
One of the foremost reasons a term insurance policy is considered a good investment is that it gives a good scope of coverage in exchange for affordable term insurance premiums. The affordability factor makes term insurance investments attractive to buyers.
Moreover, buyers get a long timeline of protection that even goes up to their lifetime. Compared to other life insurance plans that cost more to give substantial returns, term insurance plans give more returns while being easy on the pocket. Term insurance plans are also safe from market risks and fluctuations because the sum assured is independent of the capital market.
- Flexible premium paying options
Another feature that makes affordable term insurance plans a good investment is that you don’t have to break your bank balance to get them and keep them running. Term plans offer the flexibility of choosing your premium payment tenure and mode – single pay, limited pay, or regular pay.
You can choose to pay your premium every month, three months, half-year, or every year at your convenience. You can time the premium payments to your comfort. You can also get discounts on your term insurance policy by getting online term plans.
- Return of premiums1
Most life insurance plans come with a survival benefit that pays you a sum in case you survive the tenure of the plan and don’t get the maturity payout as a result. However, a term insurance policy usually didn’t offer this benefit.
But with a TATA AIA term plan, you get the option of receiving 105% of the insurance premiums paid by you at the expiry of the term plan and on your survival. The return of premium1 benefit ensures your initial investment in the term plan does not get wasted, and you receive the invested amount back in case there is no unfortunate demise or other eventuality.
- Additional rider# protection
The core feature of offline and online term plans is offering a financial safety net in the form of a death benefit to the buyer’s family members on their unforeseen demise. However, what makes term plans a good investment is that they go the extra mile in offering financial security through riders#.
Riders# are extra covers that provide an additional layer of coverage over and above the base death benefit in the face of other life-altering eventualities. These eventualities include accidents, critical illnesses, terminal ailments, loss of employment, and more. In the occurrence of any such eventuality, buyers get an additional monetary benefit that assists them through the situation.
- Tax* benefits
Term insurance also makes a profitable investment as it has specific tax* advantages to it under the relevant provisions of the Income Tax* Act of 1961. Under section 80C of the Act, you can claim the premiums paid by you towards a term insurance policy as returns. You can claim up to ₹1,50,000 in a year as tax* rebates.
Even the death benefit you receive under the term insurance policy is tax*-free according to section 10(10D) of the Act. If you add a health rider# like a critical illness or terminal illness rider to your term insurance policy, you can get back up to ₹25,000 from the premiums paid towards the term plan. With tax* benefits like these, you can save your annual income and unlock insurance advantages simultaneously.
A term insurance plan is an evergreen good and sensible saving. Whether it is 2023 or any other year in the near future. It can help your family fulfil their goals like marriage, education, travel, utility payments, loan repayment, and others. It can help them continue their lifestyle in your absence and not compromise their dignity.
While buying a term insurance plan, keep certain factors in mind, like your financial needs, budget, and income capacity. Knowing these will help you figure out your ideal sum assured in the term insurance policy. Keep in mind external factors like inflation and the premium rates prescribed by the insurance provider while comparing term insurance quotes.