5 Reasons to Buy a Term Insurance Policy

Term insurance is one of the most popular types of life insurance plans available today. A great portion of its growing popularity can be attributed to the fact that it is a pure risk protection plan - it secures your family financially in your absence. So you can live a stress-free life, knowing that there will be enough to take care of them.

In this article, let's look at a few reasons why you must consider buying term insurance. Let’s dive right in!

5 Reasons to Buy Term Insurance

Financial Protection of Dependents

A term insurance plan is a great way to ensure your dependents (members who depend on your income for their living expenses) will have financial protection in your absence. If you pass away while the policy is active, it will pay a fixed sum to them.

Your family can use this money to pay for their regular expenses such as grocery bills, electricity bills, as well as other expenses, like your child’s education or wedding expenses, etc.

Covers Loans & Liabilities

If you have loans or liabilities like an education loan, home loan, business loan, etc., and pass away before settling them, the burden of repayment would fall on your family. Imagine the financial hardships they would have to go through in such a case.

Term insurance can help safeguard your family from such loans/ liabilities. They can use the term insurance payout they will receive (if you pass away) to repay the outstanding loans/liabilities and get the burden of repayment off their chest.

Simple and Affordable Product

Term insurance is the simplest form of life insurance available in the market today. In exchange for the premiums you pay, it promises to pay a fixed sum of money to your family if you pass away during the policy period.

It is a pure risk cover and is easier to understand compared to other types of life insurance plans that combine risk cover with savings/investments. Further, it is also among the most affordable types of life insurance. The premiums are reasonable, allowing you to select a policy with sufficient coverage for your family.

For example, the ABSLI DigiShield Plan will cost approximately ₹1,289 monthly (with tax) for a 30-year-old non-smoker male, cover of ₹1 Crore up to the age of 60 years.

Note: The premium figures are taken in September 2022.

Dual Tax Advantages

Tax benefits⁴ for term insurance can be availed for both the premiums you pay and the claim your nominee will receive - under various sections of the Income Tax Act of India, 1961. You can claim tax deductions on the term insurance premiums paid every year under Section 80C. The term insurance claim amount your nominee will receive will be exempt from taxation as per Section 10(10D)³.

Added Risk Protection

Term insurance plans also allow you to select riders. Riders are add-ons or optional benefits that offer added protection against certain risks like accidental disability, diagnosis of a serious illness, and so on. You can select riders by paying a nominal extra cost. And, you won’t have to undergo any additional paperwork or medical tests - beyond the ones you undergo for your base policy.

Here are a few riders you can opt for with your term insurance plan -

• Critical Illness Rider
• Accidental Death Benefit Rider
• Accidental Disability Rider
• Waiver of Premium Due To Critical Illness Rider
• Waiver of Premium Due To Accidental Disability Rider
• Surgical Care Rider
• Hospital Care Rider, etc.

Example: Sachit buys the ABSLI Life Shield Term Insurance for a sum assured of ₹1 Crore and a duration of 50 years. He also buys the ABSLI Accidental Death Benefit Rider Plus for a cover amount of Rs. 50 Lakhs along with the policy. In the 10th policy year, he passes away because of an accident.

In this case, his family will receive -

• Accidental death benefit rider amount of ₹50 Lakhs.
• Term insurance claim amount of ₹1 Crore. So, his family will be paid a total claim of ₹1.5 Crores. So, these are a few reasons why you should consider buying a term insurance policy.

Looking To Buy Term Insurance?

Here are two plans you can consider buying -

ABSLI Life Shield Plan

ABSLI Life Shield Plan is one of the best term insurance plans that will pay a fixed sum as a death benefit to your nominee if you pass away unexpectedly during the policy period. There are many features in the plan, including a return of premium at maturity, limited pay, increasing and decreasing cover, joint life protection, and riders (critical illness rider, accidental death benefit rider, etc.).

ABSLI DigiShield Plan

ABSLI DigiShield Plan is an ideal investment plan that provides a death benefit to your loved ones should you pass away unexpectedly during the policy period. A variety of features are included in this plan, including sum assured reduction option, increasing cover, whole life cover (up to 100 years of age), maturity benefit with return of premium option, and riders (Accelerated critical illness rider, Accidental death benefit rider, Accidental disability rider, etc.).

Wrapping Up!

As life goes on and uncertainties rise, every family needs to have a sound financial plan. Term life insurance is the most effective way to ensure that your family's financial future is protected. However, before signing up for the policy, ensure it meets your needs and expectations.