UnderstandingTerm Insurance and Reasons to buy it

The most basic kind of life insurance is term insurance in India. It's perhaps a very cost-effective life insuranceoption. Term insurance has no investment component and just assures apre-determined payment upon the insured's death.  

What is the definitionof a term insurance policy? 

Term insurance programmes, on the whole, do not provide anysurvivor benefits. The premiums are among the lowest at the beginning of thepolicy, but they steadily rise as the insured's age increases. The policyholder pays a greater premium, receives no returns, and hence has less need for a significant amount of coverage. All of this implies that a normal term insurance plan is far from appropriate in many situations. 

Three Advantages ofPurchasing a Return of Premium Term Plan 

Term life insurance in India with a return of premiums includesall of the advantages of normal term insurance plus a survivor bonus. It's agreat alternative for folks looking for a guaranteed return on their lifeinsurance.  

The following are threeadvantages of purchasing a term insurance plan with a premium refund: 

1. Premium BenefitRefund 

Term insurance plan in India with a return of premiums, on theother hand, allows the policyholder to obtain all of their money returned ifthey outlast the policy period. Canara HSBC Oriental Bank of Commerce Life Insurance's iSelect Star Term Plan has a return of premium feature. You are free to utilise the advantage in any way you see suitable. 

2. Death Insurance 

Riders that cover accidental death, accidental incapacity,and critical diseases are available as options. A term insurance plan with areturn of premium and appropriate riders offers complete coverage at a low cost. 

3. Tax Advantages 

Investing in a term insurance policy with a return of premiumallows the policyholder to lower his or her tax liability. Under Section 80C ofthe Income Tax Act, 1961, the premiums paid for the coverage are eligible fortax deductions of up to Rs 1.5 lakh each year. Section 10 (10D) of the tax legislation exempts the dividend from income tax. 

Closing: 

Term insurance plans in India come in a variety of shapes andsizes, and there are also a variety of life insurance policies on the market.Many life insurance policies provide returns, but the returns are often market-linked and are not guaranteed. You may purchase a vehicle or refurbish your home with the lump-sum payment you get at maturity. Financial planning is easier when you have a clear picture. Terms insurance with a premium refund is more favourable than normal terms insurance. For those who fear losing the money on their payments but still want to see a return on that investment, this is a fantastic alternative to consider. 

You May Also Read: Do you not have health insurance yet? Read this!