Term life insurance: Affordable protection for your loved ones

Protect your family with Term Life Insurance

New Delhi (India), March 22: Term Life Insurance, or Term Plan, is a pure financial protection tool to safeguard your loved ones in your absence. It works in a simple yet straightforward concept of income replacement, as the benefit can cover expenditures like loan repayments, children's education, or even daily expenses after losing a crucial income source. Term insurance is considered one of the most popular and affordable types of life insurance policies in India.

What Makes Term Life Insurance the Best Option for Your Loved Ones?

There are several reasons why term insurance is an ideal option for you. Some of the primary factors include:

Affordability and cost-effectiveness

With term life insurance, if you cease to exist during the policy term, your family will get a sizable payout in exchange for your regular little premium payments.

Now, let’s understand the types of low-cost Term Insurance in the section below:

• Normal Term Plans

A Normal Term Plan pays out a death benefit if the policyholder passes away unexpectedly during the policy period. In contrast to regular life insurance, no bonus is paid if the insured individual survives past the policy's term. You may obtain the maximum amount covered at a reasonable cost, and the premium is far less than it would be for a standard term insurance policy.

• Level Term Plans

Throughout the term of the policy, the sum assured stays fixed, and upon the death of the life insurer, the beneficiary gets paid a death benefit.

• Return of the Premium Term Plans

In the case of Return of Premium Term Plans, if you outlive the policy term, you will receive a refund of all premiums paid throughout the years. It's similar to receiving a refund, but only if you're alive after the term.

This plan provides a death benefit if the policyholder dies during the policy period. Suppose the policyholder survives until the end of the insurance term. In that case, they will get a full return of their payment, less any relevant taxes—this plan typically costs twice as much as a Regular Term Plan. Additionally, you may only terminate your coverage after the insurance has expired. If you cease making premium payments or cancel the plan before the end of the term, the insurer is not obligated to refund any already paid premiums.

Choose the Best Term Plan to secure your Family Financially

• Increasing Term Plans

This one is a smart option because it takes inflation into account. Your coverage amount (sum assured) increases yearly by a certain percentage. So, it keeps pace with the rising cost of living.

During the policy's duration, the policyholder can raise the sum insured annually for the same annual premium. This outlines a greater premium for these plans compared to level-term insurance.

• Decreasing Term Plans

Suppose you owe a lot of money on a mortgage or another loan. That is the purpose of this kind of term plan. The coverage amount lowers when you pay off your debts since you have fewer financial obligations.

Thus, a decreasing term insurance plan provides life coverage that decreases year after year for a fixed term. These plans are great options to cover particular liabilities, such as a house or personal loan, whose outstanding balance reduces over time. The premium for this type of plan is also fixed and remains constant during the policy term.

• Convertible Term Plans

This one is versatile and flexible. You can begin with a simple term plan and upgrade to a more comprehensive life insurance policy. For example, suppose you purchase a 20-year term insurance policy. After 5 years, if you decide you'd rather have an Endowment Policy, a Whole Life Insurance policy, etc., you can easily switch to the alternative. In this way, you can update your insurance.

• Term Plans with Riders

In addition to the standard term plan, you can add riders such as Accidental Death Insurance (which pays over the sum assured in the event of death due to an accident) and Critical Illness Cover (which provides a lump sum for treatment of selected critical conditions like cancer, heart disease, etc.) for an additional premium. These riders can give you and your family an additional layer of security for a little extra premium. Suppose a person purchases a rider and is later granted a Premium Waiver Benefit; they will no longer have to pay premiums for that rider.

One more rider is there — Accidental Total Permanent Disability Rider, which provides you with a lump sum of money if you become totally and permanently disabled as a consequence of an accident.

Some Other Features of Term Life Insurance

• Flexible policy terms: You can choose a term plan for 10, 20, 30, or more years. It means you can specify how long you want your coverage to last.

• Premiums with life coverage: In the case of term life insurance, you pay a set amount of money, i.e. premiums, to the insurance firm (ACKO). It can be monthly, half a year, or annually. In exchange, the insurance company guarantees to pay a large lump amount to your family or beneficiaries if you expire within the policy period.

• Tax benefits: The premiums you pay for term insurance are eligible for tax deductions under section 80C of the Income Tax Act, reducing your taxable income. Also, the payout is usually tax-free under Section 10 (10D).

• Customisable and flexible: You may select the coverage amount (sum assured) that best meets your family's demands and fits your budget.

Who Should Opt for a Term Insurance Plan?

• Family Dependents: Term life insurance may be a wise choice if you have dependents, such as ageing parents, children, or spouses. It makes sure they can handle their finances even in your absence.

• Only Wage Earners: It's crucial to have term life insurance if you're the one who makes the money in the family. It guarantees that if you are unable to support your family, they won't experience financial hardship.

• Holders of Debt: If you have loans or debts, such as a mortgage or a vehicle loan, term life insurance can help to alleviate the strain on your family.

• Business Owners: If you operate a business, term life insurance might be essential in ensuring a seamless succession or covering corporate obligations in the event of your death.

• Single Parents: If you're single, your children rely totally on you. Term life insurance can provide peace of mind by ensuring your children will be financially supported if something happens to you.

• Newly Married Couples: Newlyweds who have begun a family should consider this plan to protect their dependents' finances. A family might use term insurance as a financial buffer to meet their bills and other financial commitments.

• People with High-risk Jobs: Consider getting term insurance if you work in a high-risk industry like mining, construction, or aviation. It will financially protect your dependents in an accident or untimely death.

• Planning Financial Bequest: If you wish to leave an inheritance or financial legacy for your heirs, term life insurance can ensure they get it.

• Anyone Young and Healthy: Purchasing term life insurance when young and healthy might be more cost-effective. It's like securing a good bargain for the future. Term insurance is something that young professionals who are just starting their professions and have parents or spouses who need their money should think about purchasing. Term insurance is best purchased when young since the rates are cheap.

Conclusion

Term insurance is a great option, especially if you're young and healthy. It ensures your loved ones won't face financial hardship if you are not around to support them. However, thorough research is essential before choosing the best life insurance plan that suits your requirements. Check out the official ACKO page and learn about the various life insurance policy options.

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