5 Reasons Why You Should Not Underrate Term Insurance

Imagine making a well-thought-out “money safety net” as reliable as an umbrella in a rainstorm. This is fundamentally what term insurance does—an easy, affordable way to safeguard your family's future from unforeseen circumstances. In simpler terms, term insurance is a kind of life insurance that assures that a sum of money will be given to your family in case you pass away within your policy term, just like a financial angel would come in if you were not there.

However, sometimes, trying to understand the delicate ideas of term insurance feels like you're trying to navigate a maze with twisting pathways and sharp bends. For many people, insurance terminology and the array of options available can seem overwhelming and perplexing.

In this ocean of jargon such as ‘sum assured’, ‘riders’ and whatnot, it is easy to lose track, hence not knowing the most suitable cover for oneself. Even while term insurance is more straightforward than other life insurance options, it can still be difficult for the typical person to grasp.

This article aims to examine term insurance, highlighting its benefits and comprehending why it is a crucial element of a well-rounded financial plan. We hope that after reading this article, you will have a clear and concise understanding of term insurance, which enables you to make wise decisions for the sake of your family.

Let's begin by discussing term insurance!

What Is Term Insurance?

Getting term insurance is a simple approach to protect your family's future. Like having a safety net for finances, the insurance company steps in to support your dearest ones in the event that you pass away while the policy is in effect.

Sum assured is the total amount of money that the insurance company promises to pay if something bad happens to you. It is meant to assure that your loved ones can maintain their way of living and pursue their aspirations and favourite activities without feeling as if they are limited by anything. This amount will be handed over to your family based on the claims settlement alternative that you selected while procuring the policy.

However, term insurance is like a pure risk cover: if you make it through the whole policy term, you won't get any money back.

Term insurance is a simple and cost-effective type of life insurance. This will substitute your income and help in meeting your family’s needs while not jeopardising their goals or quality of life even when you are absent.

Keep scrolling to know why you should not underrate term insurance

5 Reasons For Not Underrating Term Insurance

Here are the five crucial reasons why you should never underrate term insurance-

1. Affordability And Cost-Effectiveness

Term insurance is one of the least expensive types of life insurance obtainable. Term insurance only provides a death benefit; other life insurance policies include savings/investment components and have higher premiums. For a notable cover without spending much, this option stands out among all other insurance products due to its cheapness and simplicity. Buying a term life insurance policy can offer you a significant cost advantage over other insurance products.

2. Customisation And Flexibility

Term life insurance provides an array of choices for an individual and family that suits their needs.

a. Is your salary unstable? You can use the limited pay option to pay off your premiums quickly.

b. Interested in a cover that can automatically increase over time? You can select the increasing cover feature.

c. Do you think your family can't manage the lump sum amount? You can also personalise the claim payout for your family.

3. Coverage Against Uncertain Situations

Life is not a clear-cut answer. The possibility of a premature death cannot be eliminated. To cover the financial losses associated with such a risk, it is suggested that you purchase a term insurance policy. Your insurance company will disburse the sum assured to your family members, ensuring a high level of financial stability when you are no longer present.

4. Advantages Of Additional Riders

When buying a term insurance policy, you can get comprehensive coverage by selecting riders. Riders give an extra layer of protection at an additional cost, though. Many insurance companies offer add-ons that cover things like critical illnesses, disabilities, accidents, and more.

5. Tax Benefits***

Don't underestimate the tax benefits*** of such plans. Income Tax Act 1961’s Section 10(10D)** exempts death benefit payout and allows tax deductions up to Rs 1.5 lakh for annual premiums paid under term plans as per Section 80C.

Next up, we will discuss the major benefits of term insurance policies. Read on to learn more about them below-

5 Major Advantages Of Term Insurance Policies

The Most Straightforward Type Of Life Insurance

Term insurance is the most simple type of life insurance. During the term, if you die, a specific amount of money will be given to your family in case of that unfortunate event. To get this, all you need to do is to pay your premiums on time.

Affordable Premium

The premiums for term insurance policies are quite low and cost-effective. So what does this mean? You can secure your family’s future without having to break the bank.

Provides Financial Security For Your Family Members

If you don’t want to compromise the goals of your family or put them at risk when you are not there, purchasing a term policy would be the wisest decision. In your absence, it can serve as a replacement for your earnings to ensure your family does not compromise its aspirations or life quality but rather meets future financial obligations.

Guarantee^# Of A 3-Year Claim Payout

As per Section 45 of the Indian Insurance Act, if you've kept your term insurance going for three years straight, the insurer can't refuse to pay out a death claim on the grounds of misstatement, fraud, or suppression of facts.

Therefore, you must ensure that all your premiums are well paid and that your family will get the claim amount in case you die during the three years that your term insurance policy takes effect.

Global Coverage Of Death

Another advantage is that term insurance ensures coverage of death worldwide. It will cover every sort of death anywhere in the globe, except suicide, within the first year of purchasing a policy.

Wrapping Up!

Term insurance is not just a policy; it's a way to ensure your family's safety and comfort. Because of its low cost, flexibility, and comprehensive coverage, you should consider this as an ideal element for your financial toolbox. And here's the kicker - term insurance is super versatile. It's worth every penny, giving you peace of mind and keeping your family secure, even if you're not around. Seriously, it's one of the most affordable options out there that offers top-notch reassurance.