Benefits of Term Life Insurance

Term life insurance provides a guaranteed payout to your loved ones if you pass away within the policy's specified term. Know the tax benefits, health and disability riders, flexibility, and add-on benefits.
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3 min
17-March-2025

Term life insurance, often referred to simply as term insurance, is a policy that provides coverage for a specified period or ‘term’. Unlike other life insurance policies that combine savings and investment elements, term insurance focuses solely on providing a death cover. This makes it a cost-effective option, allowing policyholders to secure substantial coverage at relatively lower premiums. The primary purpose of term insurance is to offer financial protection to the policyholder's beneficiaries in the event of their untimely demise during the policy term. Now, let us delve deeper into  what term insurance is and explore the numerous benefits it offers.

Term insurance is a type of life insurance that provides coverage for a predetermined period, usually ranging from 5 to 30 years. If the insured individual passes away during the policy term, the insurance company pays a death cover to the beneficiaries. This lump sum amount can be used to cover various expenses such as mortgage payments, children's education, daily living costs, and any outstanding debts. Since term insurance does not have a cash value component, the premiums are generally lower compared to other life insurance policies.

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Top benefits of term insurance plan

Benefits of term insurance:

Term plan benefits go beyond just life coverage. These plans offer comprehensive financial protection, affordability, and flexibility, making them a vital part of your long-term financial planning.

  • Death cover: A term insurance plan offers a death cover to the nominee in case the policyholder passes away during the policy term. This ensures the family has financial support in difficult times, maintaining their lifestyle and meeting important obligations.

  • Financial protection for family: With a term plan, you can ensure your family remains financially secure even in your absence. It covers essential expenses such as EMIs, education, and daily needs, giving them a stable financial future without compromises.

  • High sum assured at low premium: One of the key term plan benefits is getting a high sum assured at affordable premiums. A substantial cover like Rs. 2 crore can be secured with a reasonable monthly or yearly premium, especially when purchased early in life.

  • Whole life cover: Some term plans offer whole life coverage, extending up to 99 or even 100 years of age. This ensures your dependents are protected even in your later years, providing peace of mind for lifelong security.

  • Affordable premiums for high life cover: A Rs. 2 crore term plan can be surprisingly cost-effective. Insurers offer economical premiums based on your age and health profile, making it an accessible and efficient financial tool for large-scale coverage.

  • Ease of buying online: Today’s digital platforms make purchasing term insurance fast and hassle-free. You can compare plans, calculate premiums, and complete documentation online, all from the comfort of your home without any physical paperwork.

  • Entry age flexibility: Term plans generally allow a broad entry age, ranging from 18 to 65 years. This flexibility makes it easier to start early or even secure coverage later in life, depending on individual financial needs.

  • Financial security in emergencies: Term insurance acts as a financial cushion during emergencies, ensuring that your family doesn’t have to depend on loans or deplete savings if something unfortunate happens to the insured person.

  • Customisable coverage: You can tailor your policy with additional riders and coverage options based on life stages and financial responsibilities. Whether it’s protecting against illness or accident, customisation enhances your term plan benefits.

  • Flexibility to increase cover at life stages: Many insurers offer the option to enhance your coverage during key life events like marriage or childbirth. This step-up option ensures your policy grows with your increasing responsibilities.

  • Convertible term insurance plans: Convertible plans offer the flexibility to convert your term plan into a whole life or endowment policy at a later date. This is beneficial if your insurance needs evolve and you want extended protection or a maturity benefit.

Tax benefits

Benefits of term life insurance also include tax savings. Term plans help you reduce your taxable income while ensuring long-term financial protection for your loved ones.

  • Tax deductions under Section 80C: Premiums paid for a term insurance plan qualify for tax deductions under Section 80C of the Income Tax Act, up to a limit of Rs. 1.5 lakh per financial year. This makes term insurance a smart tax-saving tool while securing your family’s future.

  • Tax-free death cover under Section 10(10D): The death cover received by the nominee is fully tax-exempt under Section 10(10D) of the Income Tax Act. This ensures that your loved ones receive the entire sum assured from the term insurance plan without any deductions.

Health and disability-related riders

Riders enhance term plan benefits by offering additional coverage for health-related risks. These optional add-ons provide extra protection against unexpected medical or accidental emergencies.

  • Critical illness rider: This rider offers a lump sum payout if you are diagnosed with a specified critical illness such as cancer, heart attack, or stroke. It helps cover treatment costs, recovery expenses, or loss of income during the illness period.

  • Accidental total permanent disability rider: If the insured person becomes permanently disabled due to an accident, this rider provides a payout to help manage financial commitments and lifestyle adjustments, ensuring income continuity and security.

  • Premium waiver benefit: Under this benefit, all future premiums are waived off if the policyholder becomes critically ill or permanently disabled. The policy continues to offer full coverage without any financial burden on the insured.

  • Disability benefits: Disability riders cover temporary or permanent disability due to accidents. These benefits provide regular income or lump sum support to help manage living expenses, rehabilitation, and loss of employment due to physical limitations.

Flexibility and add-ons

The benefits of term life insurance include various customisation options that allow you to tailor the policy according to your evolving needs and life goals.

  • Return of premium option: If you survive the policy term, this feature allows you to get back the total premiums paid (excluding taxes). It’s ideal for those seeking protection along with some return on their investment.

  • Flexible payout options (lump sum/monthly/income + lump sum): You can choose how your family receives the claim amount—either as a lump sum, monthly income, or a mix of both. This flexibility ensures your family has a steady cash flow after your demise.

  • Multiple payout options: Some policies offer graded or staggered payouts, helping dependents manage finances better over time rather than receiving a large amount all at once. This ensures responsible and sustained financial support.

  • Optional rider add-ons: Riders such as accidental death cover, critical illness, hospitalisation cover, and waiver of premium can be added to enhance the scope of your base policy, giving you comprehensive protection under one plan.

How to choose the best term insurance with the right sum assured option?

Purchasing a term plan at a young age offers several advantages that strengthen your long-term financial planning. Here are the benefits of term life insurance when bought early:

  • Lower premiums: The premium amount is significantly lower when you're young and healthy. Early buyers lock in affordable rates for the entire term.

  • Higher sum assured: Younger applicants are generally eligible for higher life cover, such as Rs. 2 crore, at competitive premiums, enhancing the benefits of term insurance plan.

  • Better coverage options: Early buyers have access to a wider range of plans, riders, and features due to fewer age or health restrictions.

  • Longer policy tenure: Starting early means you can opt for a longer policy term, covering your income-earning years and beyond.

  • Health-based eligibility: Younger individuals usually face fewer medical complications, leading to faster approvals and lower risk-based premiums.

How can term insurance protect your family’s future?

A well-chosen term insurance plan acts as a financial safeguard for your loved ones. Here's how term plan benefits protect your family’s future:

  • Provides financial security in your absence: A term plan ensures your family is not burdened with financial worries if something unfortunate happens to you.

  • Pays off debts and loans: The payout can help clear outstanding debts like home loans, car loans, or education loans, securing your family's assets.

  • Supports children's education: The sum assured can fund your children's academic dreams even in your absence, helping them pursue their goals.

  • Helps maintain living standards: Monthly expenses such as groceries, utilities, and lifestyle costs can be covered through the policy benefit, ensuring consistency in their quality of life.

  • Covers long-term goals: Whether it's a child's marriage or a spouse's retirement, a Rs. 2 crore term plan can serve these long-term commitments.

  • Offers peace of mind: With term life insurance with maturity benefit, you also have the option of receiving the premiums back if you survive the term—adding value and reassurance.

How to choose the most suitable term insurance policy

Following are some helpful tips for choosing the most suitable term insurance policy, including options like term life insurance with maturity benefit and understanding the overall benefits of term life insurance:

  • Assess your coverage needs: Evaluate your financial obligations, such as loans, mortgage, children's education, and daily living expenses. This assessment will help you determine the appropriate coverage amount that will adequately protect your family's financial future.
  • Choose an appropriate policy term: Select a policy term that aligns with your financial goals and obligations. Think about your mortgage term, your children's ages, and your retirement plans to choose the right policy duration.
  • Compare different policies: Different plans have different age limits—find one that gives you maximum coverage. Compare policies and get a quote today! Compare various term insurance policies from different insurers. Look at the coverage, premiums, riders, and claim settlement ratios to find the suitable policy that meets your requirements.
  • Check the insurer’s credibility: Choose an insurer with a strong financial background and a high claim settlement ratio. This ensures that your claims will be processed efficiently, providing timely financial support to your beneficiaries.
  • Consider inflation: Factor in the impact of inflation on your coverage amount. Choose a policy with increasing coverage to keep your death cover aligned with future financial needs.
  • Read the fine print: Carefully read the policy documents to understand the terms and conditions, exclusions, and limitations. This will prevent any surprises or misunderstandings at the time of claim settlement.'
  • Seek professional advice: Consult financial advisors for personalised guidance on selecting policies like term life insurance with maturity benefit, tailored to your goals and financial situation.

Also, read: 1 crore term insurance

Why choose the right term insurance plan?

Choosing the right term insurance plan is crucial for securing your family’s financial future. It provides comprehensive coverage at an affordable cost while offering additional benefits like riders, tax savings, and peace of mind.

  • Financial security for your family: A well-chosen term plan ensures your loved ones are financially protected in your absence.
  • Affordable premiums: Selecting the right plan helps you get maximum coverage at a budget-friendly cost.
  • Customisable coverage: You can add riders like critical illness and accidental death covers for extra protection.
  • Tax benefits: Term insurance offers tax savings under sections 80C and 10(10D) of the Income Tax Act.
  • Peace of mind: Knowing your family’s future is secure gives you financial confidence and mental peace.

Low premiums, high coverage, tax benefits—term insurance has it all! Check plans, starting at Rs. 15/day*!

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How to choose the best term insurance with the right sum assured option?

Selecting the appropriate sum assured in a term insurance plan depends on your current lifestyle, financial obligations, and future goals. With the benefits of term life insurance, choosing the right coverage ensures your loved ones remain financially protected even in your absence.

  • 50 lakh term insurance plan:

Ideal for individuals in the early stages of their career or those with limited financial responsibilities. The 50 lakh term insurance plan provides basic life cover at an affordable premium and suits minimal risk profiles.

  • 75 lakh term insurance plan:

The 75 lakh term insurance plan is suitable for young professionals or small families looking for enhanced coverage while keeping premiums budget-friendly. It offers a mid-level safety net for dependents and future needs.

  • 1 crore term insurance:

The 1 crore term insurance plan is a popular choice among salaried professionals aiming for significant financial security. It provides robust coverage to meet both immediate and long-term family needs.

  • 1 crore 50 lakh term insurance plan:

Recommended for individuals with moderate liabilities and growing family responsibilities, the 1 crore 50 lakh term insurance plan offers a well-balanced cover for lifestyle protection and future goal planning.

  • 1 crore 75 lakh term insurance plan:

Suitable for mid-career professionals managing EMIs, child’s education, and other commitments, the 1 crore 75 lakh term insurance plan strengthens your family’s financial shield against uncertainties.

  • 2 crore term insurance:

The 2 crore term insurance plan is ideal for families with significant financial needs or multiple dependents. It ensures your loved ones maintain their lifestyle and reach future goals, even in your absence.

  • 5 crore life insurance policy:

A comprehensive option for high-income earners and business owners, the 5 crore life insurance policy provides maximum protection and income replacement in case of an untimely demise.

Key reasons to buy term insurance plan

Here are some compelling reasons why you should consider getting a term insurance plan, along with its term life benefits:

  • Family protection: The primary reason to buy a term insurance plan is to provide financial security to your family.If the insured passes away suddenly, the death cover helps their family manage expenses and maintain their lifestyle.
  • Debt repayment: Term insurance can help in repaying outstanding debts such as home loans, personal loans, or credit card debts. This prevents your family from being burdened with financial liabilities in your absence.
  • Child's education: A term insurance plan ensures your child’s education by covering school fees, higher studies, and other expenses, securing their future.
  • Affordable financial protection: Term insurance offers substantial coverage at affordable premiums, making it accessible for individuals across different income brackets. This ensures that everyone can secure their family's financial future without excessive costs.
  • Supplementing existing coverage: If you already have a life insurance policy, a term plan can supplement your existing coverage. This is particularly useful during specific periods of high financial responsibility, such as when you have young children or are paying off a large mortgage.
  • Peace of mind: Knowing that your family's financial future is secure brings peace of mind. Term insurance eases financial worries, letting you focus on living a stress-free life.
  • Tax benefits: Term insurance premiums get tax benefits under Section 80C, and the death payout is tax-free under Section 10(10D). These tax benefits make term insurance an attractive financial planning tool.
  • Flexibility and customisation: Term insurance policies offer flexibility in terms of policy duration and coverage amount, which is one of the benefits of term insurance. You can customise the policy to suit your specific needs and financial goals, ensuring optimal protection for your family.

Also, read about investment plans for child education expenses.

Conclusion

Choosing the right term life insurance policy is a crucial step in securing your family's financial future. By understanding the numerous benefits of term insurance, you can make an informed decision that provides peace of mind and financial security. Whether it is the affordability of premiums, the flexibility in policy terms, or the tax benefits, term insurance offers a range of advantages that make it an essential component of a sound financial plan.

When selecting a term insurance policy, take the time to assess your coverage needs, compare different policies, and choose a reputable insurer. Consider seeking professional advice to ensure that you make the best decision for your family's unique circumstances. Ultimately, the goal of term insurance is to provide a safety net for your loved ones, ensuring they are protected against financial uncertainties in your absence. By investing in a term insurance plan, you are taking a proactive step towards ensuring that your loved ones are protected and cared for, no matter what the future holds.

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Frequently asked questions

What are the benefits of term life insurance?

Term life insurance provides several key benefits:

  • Financial security: It ensures that your beneficiaries receive a death cover if you pass away during the policy term, protecting their financial future.
  • Affordability: With generally lower premiums compared to other life insurance types, it offers substantial coverage at a reasonable cost.
  • Flexibility: You can choose the coverage amount and policy term that align with your financial obligations and goals.
  • Tax benefits: In India, premiums paid can be deducted under Section 80C, and the death cover is tax-free under Section 10(10D).
What are the benefits of life insurance?

Life insurance, in general, offers:

  • Peace of mind: It guarantees that your loved ones will be financially supported for the lifetime.
  • Debt repayment: It can cover outstanding debts such as mortgages and loans, preventing your family from financial strain.
  • Future planning: It assists in achieving long-term goals like funding your children's education and ensuring retirement savings.
  • Tax advantages: Offers tax deductions on premiums and tax-free death cover, providing fiscal relief.

Compare term plans, premiums, and coverage in one place. Get a quote now!

Is getting term insurance a good choice?

Yes, term insurance is an excellent choice for those seeking affordable financial protection. It provides significant coverage at lower premiums, is straightforward, and can be customised to meet your specific needs, ensuring peace of mind and financial security for your family.

How much term insurance coverage is ideal to have?

Ideally, term insurance coverage should be at least 10-15 times your annual income. This ensures your family can maintain their standard of living, cover essential expenses, pay off debts, and meet future financial needs in your absence. Adjust the coverage based on specific needs such as children's education, existing loans, and other long-term financial commitments.

When is the ideal time to purchase term insurance?

The optimal time to buy term insurance is in your 20s or 30s. At this stage, premiums are more affordable, and it’s easier to secure coverage. Early purchase ensures financial protection for your dependents and locks in lower rates for the long term.

Does term insurance offer maturity benefits?

Term insurance generally does not provide maturity benefits, as it is designed to offer financial protection in case of the policyholder’s death. However, some plans with a return of premium option refund the premiums paid if the policyholder survives the term.

How do the benefits of term insurance differ from life insurance?

Term insurance provides pure life coverage with a death benefit, whereas life insurance includes both protection and savings or investment components, offering maturity benefits and wealth-building options along with financial security.

Are there any tax advantages when buying term insurance?

Yes, buying term insurance offers tax benefits under Section 80C on premiums paid and Section 10(10D) on death benefits received, helping you save money while securing your family's financial future.

Can a term insurance plan help with my child’s future expenses?

Absolutely. Term insurance ensures your child’s education and future expenses are covered even in your absence, offering peace of mind and long-term financial security for your loved ones.

Why should I consider adding riders to my term insurance policy?

Riders enhance your base cover by including extra protection like critical illness or accidental disability. They offer customised benefits at nominal costs for more comprehensive coverage.

Does term insurance offer financial support for critical illnesses or disability?

Yes, with the right riders, term insurance can provide lump-sum payouts on critical illness diagnosis or disability, offering crucial financial assistance during medical emergencies or loss of income.

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