Benefits of Term Life Insurance

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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

FFollowing are the benefits of term life insurance plan:

  • Financial security for loved ones: The primary benefit of term life insurance is the financial security it provides to your family. In the event of your untimely death, the death cover can help your loved ones maintain their standard of living and meet essential expenses. This is especially crucial if you are the primary breadwinner in the family.
  • Affordable premiums: Term insurance policies are generally more affordable than other types of life insurance. These policies do not have a savings or investment part. This means the premiums are lower. As a result, people can get good coverage without putting too much pressure on their finances.
  • Flexibility in policy terms: Term insurance offers flexibility in choosing the policy term and coverage amount. You can select a term that aligns with your financial obligations, such as the duration of your mortgage or until your children complete their education. This ensures that you have coverage during the most crucial periods of your life.
  • Tax benefits: In India, term insurance premiums are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum of Rs. 1.5 lakh per annum. Additionally, the death cover received by the beneficiaries is not taxable under Section 10(10D), providing further financial relief.
  • Riders and add-ons: Many insurance providers offer riders or add-ons that can enhance the coverage of a term insurance policy. Common riders include critical illness cover, accidental death cover, and waiver of premium. These riders provide additional protection and can be customised based on individual needs.
  • Simplicity and transparency: Among the several term life insurance benefits, one of the benefits of term insurance is that it is straightforward and easy to understand. The policy documents clearly outline the coverage, premiums, and benefits, making it easier for policyholders to comprehend their insurance plan without any hidden complexities.
  • Peace of mind: Knowing that your family will be financially secure in your absence provides immense peace of mind. Term insurance ensures that your loved ones will not face financial hardships, allowing you to focus on other aspects of your life without constant worry.
  • Whole life coverage: Term insurance can provide coverage up to 99 or 100 years, ensuring lifelong financial security for your loved ones.
  • Multiple death cover payout options: Choose from lump sum, monthly income, or a combination to suit your family’s financial needs after your passing.
  • Critical illness coverage: Many term plans offer riders that cover life-threatening illnesses, providing financial aid during medical crises.
  • Income replacement: In case of an untimely demise, term insurance ensures your family continues to receive a steady income, maintaining their lifestyle.

Secure your future with term insurance—affordable, flexible, and packed with benefits. Get a quote now!

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.

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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.

Also, read: Life insurance calculator

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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.

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*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Life Insurance Corporation of India (LIC), Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Company Limited, HDFC ERGO General Insurance Company, TATA AIG General Insurance Company Limited, ICICI Lombard General Insurance Company Limited, New India Assurance Limited, Chola MS General Insurance Company Limited, Zurich Kotak General Insurance Company Limited , Star Health & Allied  Insurance Company Limited, Care Health Insurance Company Limited,  Niva Bupa Health Insurance Company Limited, Aditya Birla Health Insurance Company Limited and Manipal Cigna Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services.  Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also a distributor of other third-party products from Assistance Services providers such as CPP Assistance Services Pvt. Ltd., Bajaj Finserv Health Ltd. etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective Assistance service provider company.

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