NEW DELHI: Insurance companies provide various types of policies to the people of all age group. People can choose the right insurance scheme depends on their needs and requirements. Some insurance policies are designed to protect your family during unexpected critical circumstances. One such kind of insurance is the term insurance.
Term insurance is a life insurance plan which offers financial coverage at a fixed rate of payments for a defined period of time. This is basically a protection plan, which is designed to secure the family‚Äôs future. If the term insurance policyholder expires during the term of the policy, then the death benefit amount will be paid to the nominee who is usually a family member.
The beneficiary can claim the death benefits from the insurance company, and they can choose to get a lump-sum amount or a combination of lump-sum and monthly amount as per their requirement.
Premium for Term Insurance
Term insurance does not have an investment component. For term insurance policies, the premium amount is the lowest when compared to other life insurance products. For a cover of 20 times of the annual income, the policyholder just needs to pay annually a sum of 2-3% of their annual income.
If the policy is purchased online, the policyholder can save more money on the administration and other charges.
When to purchase Term Insurance
It is best to buy the term insurance policy at an early age. At the age of 30 is ideal as an individual becomes a responsible adult at this age. One of the key points to be noted that the premium amount will be more if the age is more, and the premium amount will be less if the age is less.
If a policyholder purchases a term insurance cover of Rs 1 crore at the age of 30, he/she needs to pay as low as Rs 573 per month. Whereas, if the policyholder purchases the same term insurance cover at the age of 40, then he/she needs to pay more amount i.e., Rs 914 per month. So, it is always advised to purchase term insurance cover earlier to get it cheaper.
Benefits of Term Insurance
Term policy gives death benefit. If the policyholder expires during the term period, the death benefit amount will be paid to the beneficiary.
A policyholder is enabled to receive tax benefits under Section 80C and Section 10(10D) under the Income Tax Act of 1961. It is to be noted that tax benefits are applicable to the premium amount paid.
The total amount of the premiums paid will be returned to the policyholder if the policy completes the maturity period.
Premium is low
The premium amount for the term insurance policy lower than other life insurance policies. Source: https://timesofindia.indiatimes.com/business/faqs/insurance-faqs/what-is-term-insurance-check-benefits-premium-amount-and-other-details-here/articleshow/68114535.cms