Term insurance is a low-cost life insurance option that offers coverage for a set period. It only pays out if the policyholder dies within the predetermined time frame and does not build up any cash value. This type of policy is typically used to cover financial obligations in the event of premature death and can be converted to permanent coverage later on.
Types of Term Insurance Policies
Level Term Policy
A policy with level premiums and a fixed-term length. Suitable for those wanting to protect their family in the event of their death.
Decreasing Term Policy
A policy where the premium and coverage decrease over time. Ideal for those who may have higher expenses at the start of their policy.
Convertible Term Policy
A policy that can be converted to a permanent policy like endowment or whole life policy. Considered by those who want added flexibility and long-term coverage.
Reasons to Buy a Term Insurance Policy
Term life insurance offers financial support for loved ones if you pass away suddenly. It has advantages such as low payments, flexibility, and coverage enhancement. A lump sum payment can help support dependents, and policies last 1-30 years.
Provide your family with a replacement income should the worst happen
Ensure your mortgage payments keep being made if you pass away.
Pay off your debts, so your family doesn’t have to handle them.
Cover the cost of your funeral and other end-of-life expenses.
Benefits of Term Life Insurance
Term life insurance provides affordable and customizable coverage for unexpected death, offering financial security to the policyholder and their loved ones. It can cover debts and expenses and be converted to permanent insurance plans.
Ensure your loved ones are protected in the event of your death.
Choose the term length and coverage amount that suits you best.
Term life insurance policy premiums are often cheaper than permanent life insurance policies.
Peace of Mind
Knowing that your loved ones are taken care of brings peace of mind.
Factors that affect Term Life Insurance Premium
The older you are, the higher the premium will be.
Your health and medical history can raise your premiums.
Activities such as smoking can increase your premiums.
Tax Benefits of Term Life Insurance
A Term Life Insurance Policy provides various tax benefits under the Income Tax Act 1961.
Premiums paid towards Term Life Insurance Policy are eligible for a deduction under Section 80C of the Income Tax Act. However, subject to certain conditions.
The maturity proceeds from a Term Life Insurance Policy are tax-free under Section 10D of the Income Tax Act. However, subject to certain conditions.