1.What is the primary advantage of term insurance?
The primary advantage of term insurance is its ability to provide extensive life cover at an economical premium. It ensures financial security for dependents in the event of the policyholder's unexpected demise.
2.What is the right age to purchase a term plan?
You should purchase a term plan as early as you become eligible and start working. Purchasing a term plan early in life ensures lower premiums and allows for a longer coverage duration.
3.What is the right amount for term insurance?
The suitable term insurance amount depends on your income, financial responsibilities, and long-term goals. It should be sufficient to cover your family’s living expenses, debts, and future needs.
4.How should I decide on the required term insurance coverage?
To determine the term insurance coverage, you should consider the following factors:
● Your family’s future financial requirements
● Long-term financial goals and ongoing commitments
● Potential emergency expenses
● Outstanding loans and liabilities
5.What is the difference between the benefits of term insurance and life insurance?
Life insurance offers both death benefit and maturity benefits to the beneficiary, whereas term insurance provides the benefit of life cover. For more details, read here.
6.Can I purchase multiple term insurance plans?
You can buy multiple term plans if needed. However, opting for a single plan with higher coverage offers convenience, simplified premium management, and comprehensive protection for your family’s financial future.
7.What are the optional term plan benefits?
Riders8 are optional add-ons to a term insurance plan that offer enhanced protection against specific risks like critical illness, disability, or accidental death, for an additional but affordable premium.
8.Can I extend my term insurance to ensure critical illness coverage?
Yes, some term insurance plans offer critical illness coverage through a rider8, which provides an additional sum if the policyholder is diagnosed with a listed illness, enhancing financial protection beyond the base policy.
9.What are the benefits of using term insurance to cover outstanding debts?
Term insurance helps repay outstanding debts in case of the policyholder’s demise, ensuring the family is not burdened financially and can retain assets without the need for loans or sale of assets.
10.What are the tax benefits in term insurance?
The premiums paid for a term plan qualify for tax5 deductions under Section 80C, while the death benefit received by nominees is fully exempt from tax5 under Section 10(10D) of the Income Tax Act.
11.Are death benefits from Term Insurance taxable?
No, death benefits received from a term insurance policy are not taxable5. They are exempt under Section 10(10D) of the Income Tax Act, subject to the fulfilment of specified conditions.
12.What are the benefits of purchasing term insurance online?
Buying a term plan online saves time and effort. You can compare options, add suitable riders8, and make premium payments instantly through secure digital channels, all from the comfort of your home.
13.What happens if the policyholder survives the policy period?
A pure term plan offers no payout if the policyholder survives the term. However, a return of premium plan provides a maturity benefit and provides refunds of the total premiums paid during the policy term.
14.Does a term insurance plan give maturity benefits?
If you choose a return of premium term plan and survive the policy term, you will receive a maturity benefit equal to the total premiums paid, excluding applicable taxes.
15.Can I withdraw funds from my term insurance plan?
Term insurance does not permit fund withdrawals during the policy term. However, in the event of the policyholder’s death, the sum assured is paid to beneficiaries as a lump sum or regular income.
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