Term insurance plans offer a financial safety net for your loved ones in the event of your absence. They provide crucial support during unforeseen circumstances when your family might be facing a difficult time and help them maintain their dignity and financial stability.

A term insurance plan is a vital financial tool to secure your family's future and should be purchased early in life by everyone.

Key things to Expect from your Term insurance policy in India​

Below are some key things to expect from your term insurance policy in India:

Financial Protection for Your Loved Ones

A term insurance plan provides essential financial protection for your loved ones in the event of an unforeseen tragedy during the policy term. It ensures that your family can sustain their lifestyle and standard of living, handle financial emergencies and pursue their future goals, all without the burden of lost income.

Affordable Premiums

Term insurance plans are highly affordable and can be purchased with relatively low premiums. They can easily fit into most budgets. Additionally, purchasing a plan at a young age can lead to even greater savings, as the premiums are typically lower for younger individuals.

Flexible Payment Options

Term insurance plans offer flexible premium payment options. You can choose to pay the premium annually, half-yearly, quarterly or monthly. These options allow you to align premium payments with your income. Moreover, the flexibility makes term insurance ideal for a wide range of professionals, including both salaried and self-employed individuals.

Policy Term and Coverage Amount

Term insurance plans offer a wide range of policy term options and coverage amounts. These plans can be customised to meet your specific needs. You can choose a policy tenure that aligns with your life stage and family requirements, whether it is short or long, and adjust the coverage amount to suit your financial goals and obligations.

Enhanced Coverage through Riders

In addition to basic life coverage, term insurance plans offer various riders that can enhance your policy's financial protection. Adding these riders helps you secure your loved ones in a range of situations and strengthen the overall financial protection provided by the plan.

Tax Benefits

Term insurance provides dual tax^* benefits under The Income Tax Act, 1961. You can claim a deduction of up to ₹ 1.5 lakh per annum for the premiums paid towards your term insurance subject to conditions prescribed under Section 80C^* of The Income Tax Act, 1961. Additionally, the payout from the term insurance policy is exempt subject to conditions prescribed under Section 10(10D)^* of The Income Tax Act, 1961, which ensures that your family’s financial security remains intact in your absence.

No Maturity Benefits

It is important to note that term insurance plans typically do not offer maturity benefits. These plans are designed primarily for protection and provide a death benefit to the nominee only in the event of the policyholder's absence. If the policyholder outlives the term, no maturity benefits are provided.

Easy Claim Settlement Process

The claim settlement process for a term insurance plan is generally straightforward. The nominee simply needs to contact the insurance company and submit the necessary documents, including policy documents, bank statements, proof of identity and address, photographs and any other required paperwork. The insurance company will then assess the application and process the claim as per the chosen disbursal method.

Common mistakes to avoid when buying a term plan

Below are some mistakes to avoid when buying a term plan:

Selecting an insufficient term insurance cover

Choosing inadequate term insurance coverage^` can leave your family financially vulnerable. Your term insurance cover should be sufficient to meet your family’s future needs, account for inflation, pay off your debts and provide a cushion for emergencies. Opting for a coverage amount that is too low may not address all these needs and could put your family in a difficult situation.

Selecting a shorter policy term

Opting for a shorter policy term can leave your loved ones financially unprotected. Choosing a policy term that provides coverage for the years when your family may be financially unstable and in need of your support is crucial. You must ensure the term aligns with their future financial needs to avoid any potential lapses.

Delaying the purchase of term insurance

The earlier you purchase term insurance, the better it will be for your family’s financial security and your peace of mind. Buying it at a younger age helps you save on premiums and ensures your family is well protected. Delaying the purchase can result in higher premiums and leave your family exposed to financial difficulties if something unfortunate were to occur.

Not sharing correct medical information

Providing incorrect medical information to the insurer can result in your family’s claim being denied or your policy being terminated mid-term. It is crucial to provide accurate and complete information to ensure that your policy remains valid and your loved ones stay protected.

Conclusion

Term insurance can be an instrumental tool for securing your loved ones' future financial stability. Its affordability makes it accessible to many people and easy to purchase. Now that you understand what to expect from your plan, it is important to purchase one as soon as you can. However, be sure to avoid the mistakes listed above to ensure that your policy effectively protects your family.