Top 5 Benefits of Term Life Insurance Policy
Want to protect your family from emergency situations? Go for a term life insurance policy. It is a policy that gives your family peace of mind and comfort when the chips are down. With this type of insurance, you get a death benefit and an assured sum.
But those are not the only benefits of term life insurance policy. It involves a host of other benefits. We’ll cover each one of them here in detail. But first let’s start with something fundamental.
What is a Term Life Insurance Policy?
Term life insurance provides financial protection for a set period of time. This type of life insurance is also known as temporary life insurance. The set time period is called the “term”.
With term life insurance, the policyholder pays premiums for coverage only during the term. If the policyholder dies during that term, the insurance company pays out a lump sum of money. This money is called the death benefit. The death benefit goes to the beneficiary named in the policy.
The term can range from 1 year to 30 years. Shorter term policies have lower premiums. Term life insurance only pays out if death happens in the term. If the policyholder lives past the term, there is no payment.
Term life insurance provides a death benefit but no cash value. This makes term life insurance more affordable than permanent life insurance. Permanent life insurance is meant to last a lifetime and builds cash value.
Term life insurance works well for those who need life insurance for a set time period. Such as while raising children or paying a mortgage. It provides protection when the financial need is strongest.
The downside is term life insurance expires after the term ends. To keep coverage, the policyholder must reapply. Premiums go up as the policyholder ages. If health declines, the applicant may get rejected.
So now you know that, overall, term life insurance gives temporary coverage at affordable rates. For many families, it is a cost-effective way to protect loved ones financially.
Benefits of Term Life Insurance Policy
As a user, you should be aware of the benefits of Term Life Insurance Policy.
Convenient purchase process
Purchasing term life insurance today can be extremely convenient thanks to technological advancements. Many term life plans allow quick and easy online research, comparisons, applications, and purchases. Within minutes, individuals can navigate insurers’ websites to review policy details, compare rates, examine financial strength ratings, and complete applications. The seamless digital purchase process enables buying term life insurance rapidly from the comfort of home. This hassle-free online convenience makes obtaining coverage more accessible.
Flexible payout options
Term life insurance allows policyholders flexibility in how beneficiaries receive the death benefit funds. Payout choices often include lump sum payment, monthly installments, or a combination approach. This allows beneficiaries to select the payout method most suitable for their financial situation after losing a loved one. If they need time to adjust, monthly installments may be preferable. The flexible payout options ensure the death benefit can be paid in the way that best meets beneficiaries’ needs.
Tax advantages
Purchasing term life insurance can provide tax advantages as well. Term life insurance premiums and death benefit payouts are eligible for tax exemptions under multiple sections of the Income Tax Act. This includes deductions under sections 80C, 80D, and 10(10D). The tax exemptions allow policyholders to reduce their overall taxable income, providing additional savings. Taking advantage of these tax breaks is another way term life insurance can maximize value for policyholders.
Return of premium options
Some term life insurance plans offer a Return of Premium (ROP) rider. This provides the option to receive all the premiums paid over the policy term back if the insured survives the full term duration. While the base death benefit still terminates after the term, the return of premium feature can give added value. Policyholders pay slightly higher premiums for the ROP rider but get the peace of mind knowing premiums are returned if they outlive the term.
Whole life coverage
Most term life insurance policies offer the option to extend the coverage duration to provide lifelong protection. Policyholders can choose to renew the term life policy until age 99 or 100 years old. This ensures your beneficiaries will receive the death benefit payout even if you pass away later in life. Having whole life term insurance eliminates concerns over outliving your policy’s coverage period. It provides peace of mind knowing your loved ones will be protected into your senior years.
These are all the points you needed to know about the benefits of term life insurance. Knowing the upsides of it will help you make a sound decision. If you want to stay updated with financial news, keeping an eye on NewsCanvass.
