Benefits of Term Insurance

What matters most is what lasts the longest, and families are forever. You create countless dreams for your loved ones, ensuring that their goals take priority. However, life is unpredictable. An untimely death can jeopardize these dreams and threaten your family’s financial stability. This is where a Term Plan becomes crucial. It provides financial security for your family in your absence, allowing you to live a stress-free life, knowing they will be taken care of.

Before you invest in a term insurance plan, it’s essential to evaluate the various benefits to ensure they align with your personal needs. This thoughtful approach ensures that your decision to purchase a term plan is both meaningful and beneficial.

Top 7 Term Insurance Benefits

Here are seven significant benefits of term life insurance:

1. Provides Financial Security to Your Loved Ones The primary purpose of a term insurance policy is to offer financial protection to your dependents—those who rely on your income. In the event of your death during the policy’s tenure, your family receives a fixed sum of money. This amount can help cover regular expenses, loans, and other financial obligations.
2. Fixed Premiums for the Entire Policy Tenure When you purchase a term plan with a certain premium, that premium is locked in for the entire duration of the policy. This guarantees that your life cover will continue at the same cost, regardless of your age or life stage.
3. Highly Affordable Term insurance is the most straightforward form of life insurance, offering premiums that are generally budget-friendly. The affordability of the premiums allows you to select a cover that will remain sufficient for your family, even as living costs rise over time.For example, a Rs. 1 Crore term cover may cost as little as Rs. 900 per month. This means that for every rupee you invest, your family could receive nearly Rs. 1000 if you pass away during the policy term.Note: When deciding the coverage amount, consider your family’s lifestyle, regular expenses, and future goals.
4. 3-Year Claim Payout Guarantee If your term insurance policy has been active for three consecutive years, the insurance company cannot deny a claim based on:
   • Fraud
   • Misstatement, or
   • Suppression of facts
   This is in accordance with Section 45 of the Insurance Act, 1938. As long as you pay your premiums on time, the insurance act ensures that your family will receive the guaranteed claim amount after the policy completes three continuous years of renewals.
5. Covers All Kinds of Deaths Globally – Except Suicide Term insurance covers a wide range of deaths globally, whether they result from accidents, illnesses, or natural causes. The only exception is death by suicide in the first year of purchasing the policy. In this case, the premiums you paid in the first year, minus taxes, will be refunded to your nominee.If there are any additional exceptions, the insurance company must clearly state them in the policy wording. Unless explicitly mentioned, you do not need to assume any exceptions to this rule.
6. Tax Benefits Term plans also offer income tax benefits, both as deductions and as complete tax exemptions.
   • Under Section 80C of the Income Tax Act, 1961, you can claim a tax deduction on the premiums paid, up to Rs. 150,000 per annum.
   • Under Section 10(10D) of the Income Tax Act, 1961, the death benefit paid to your nominee (and the maturity benefit paid to you in the case of term plans with Return of Premium) is also tax-exempt, subject to specific conditions.
7. Highly Customisable One of the most significant advantages of a term plan is its customizability. You can tailor the policy to fit your preferences by selecting options such as:
   • Increasing Cover: Your term insurance cover can increase gradually by a specified percentage until it reaches a limit set by the insurer. This feature ensures that your family remains adequately covered throughout the plan’s duration.
   • Premium Payment Frequency: You can choose the frequency of your premium payments based on your convenience—whether yearly, half-yearly, quarterly, or monthly.Pro Tip: Set up a standing instruction on your bank account rather than on a credit or debit card, as cards have expiry dates that might disrupt payments.
   • Claim Payout: If you pass away while the plan is active, your family will receive the Death Benefit. Depending on your nominee’s financial aptitude, you can decide if the claim amount will be paid out as a lump sum, monthly payouts, or a combination of both.
   • Premium Payment Model: You can opt for a Limited Pay option if you wish to pay off your premiums in larger installments and enjoy coverage for the rest of the term. This option is ideal if you anticipate fluctuating business income in the future and want to secure your payments while your income is stable.Alternatively, you can choose the Regular Pay option to break down the premium into smaller payments and reduce the overall cost.
   • Riders: Riders are optional benefits that can be added to your policy for an extra yet reasonable cost. These riders provide additional financial relief under specific circumstances, covering risks such as critical illness, accidental death, or disability. Common riders include critical illness rider, accidental death benefit rider, accidental disability rider, and waiver of premium rider.

Why Choosing the Right Term Plan is Important

Given the nature of term insurance, it comes into effect when you’re no longer around. Therefore, it is an investment in the future with a lasting impact on your family’s financial stability. It’s crucial to understand all the benefits and select a policy that will meet your family’s needs in the years to come, ensuring they are protected from financial hardship in your absence.

Where to Buy Term Insurance From?

ABSLI offers two products that encompass all the aforementioned benefits and more:

• ABSLI DigiShield Plan: This plan is unique as it offers a whole life option (up to 100 years of age). It provides a Death Benefit to your nominee if you don’t survive the policy term and a Maturity Benefit (with the Return of Premium Option) to you if you do. Additionally, it includes Limited Pay and Increasing Cover options, along with a variety of essential Riders to make your policy more comprehensive.
• ABSLI Salaried Term Plan: This exclusive, comprehensive protection solution is designed for salaried individuals. It allows you to design a plan tailored to your protection needs, offering the flexibility of Lump Sum Cover and Monthly Income Cover options. Whether for education, lifestyle, or daily needs, this pure risk term plan is crafted to provide unwavering financial support, enabling your family to move confidently into the future, even in your absence.