What is the term insurance plan, what are its features, how the term insurance plan is different from other life insurance plans and should take the term plan or not. What are the benefits of taking term insurance and how does tax avoid it. Also, what are some things to be careful when taking a Term Insurance plan.
What is term insurance plan
Term Insurance Policy – Term Insurance Plan is a type of life insurance and it provides life cover for a defined period of time and if the insured dies during the term of the insurance policy, the death benefit will be payable to the nominee.
The term insurance plan has been specially designed in such a way that the needs of the insured’s family can be protected in case of death or uncertainty. It provides a set amount of coverage for a set time period. Simply put, the term of insurance and amount of insurance is determined when taking a term insurance plan.
What are the characteristics of Term Insurance Plan
In the term insurance plan, if the policyholder dies during the insurance period then the death benefit is given to the nominee. Premiums of term insurance policies are the lowest in all types of life insurance policies. Premiums are less in this policy because there is no investment component in it and the entire premium goes up to cover the risk.
On the contrary, a part of the premium in the endowment plan and money back plan goes into the risk cover of life insurance and the rest is invested. In the Term Insurance plan no maturity benefit is available on survival after the expiry of the policy term.
Pradhan Mantri Jeevan Jyoti Bima Yojana is also an affordable term insurance plan, while choosing your term plan, you can also pay attention to this option.
What should be considered when taking a Term Insurance Plan
Before taking a Term Insurance plan, these things should be taken into account:
- How good is the insurance company
- How many covers do you need?
- Examine the claims settlement ratio of the insurance company, how many percentages of the insurance claims disposed by the finance company were rejected.
- Inflation factor in premium and coverage benefits See also the insurance cover you are taking and for the period you are taking, so that your family’s needs will increase due to inflation in the coming time.
- Compare the terms and conditions of various insurance companies.
- You can also take a two term insurance plan from two different insurance companies, it will save you from one of the two companies in case of rejection of the claim.
- Also know how life insurance premium is determined.
- Term plan can take you online or offline. You may find the online plan cheaper.
Tax Benefit on Term Insurance Plan Premium paid for all life insurance policies has been exempted under Section 80C of the Income Tax Act, 1961.
Read on – Pradhan Mantri Jeevan Jyoti Bima Yojana