Last Updated on December 28, 2019 by Gopal Gidwani

The massive awareness of life insurance has ensured the growth of insurance policies in India. There are numerous life insurance products like endowment plans, money-back policies, term plan, and so on. The primary objective of these insurance policies is to provide financial support to your loved ones. Although these insurance plans might have a similar motto, you should buy a term insurance policy to protect your family financially from all eventualities of life.

Under term insurance plans, you can receive comprehensive coverage at a low price. However, before you buy a term policy for your whole family, you should seek answers to the following questions mentioned below. Let’s take a look.

1) What is a term insurance plan?
A term plan can be a pure protection plan, which can offer financial security to your family members in your absence. After your demise, your family can obtain a pay-out called a death benefit to help them maintain their standard of living. As the nominee/s of the term policy, your family will receive the death pay-out in monthly instalments or as a lump-sum amount in one go, depending on the pay-out option chosen.

2) What are the term insurance benefits?
One of the main features of a term insurance policy is the provision of the death benefit to safeguard your family financially. Apart from the financial protection, you can receive the following benefits under term insurance plans:

a) Low premium
Under a term plan, you might have to pay relatively low premiums than any other insurance policy. In addition to this, online term plan can be cheaper as compared to offline term plans due to no involvement of intermediaries.

b) Rider provision
Riders are additional benefits offered to you to enhance your base term policy. Usually, your insurer might provide riders like critical illness cover, accidental death cover, and physical disability cover.

c) Tax benefits
For premium paid for the term insurance plan, you can get income tax benefit. Under Section 80C of the Income Tax Act, 1961, you can claim a deduction of up to Rs. 1,50,000 from your taxable income.

3) When should I buy term insurance plans?
If you want to buy term insurance plans, you should buy it at a young age. When you purchase a term plan early, you can be eligible to pay lower premiums. Under term insurance plans, your premium depends on your health condition. At a younger age, since you are less likely to be prone to severe diseases like kidney failure, cancer, and so on, your premiums will be low. If you purchase a term plan at an older age when you suffer from any illnesses, you will have to pay high premiums.

4) Will I get anything in return if I survive the policy?
Term insurance plans provide death benefits to your beneficiaries in your absence. However, if you survive the term policy, you would not be eligible to receive anything in return. If you want to receive survival benefits, you should select a return of premium term insurance plan. Under return of premium term plan, your insurer will return your entire premium amount at maturity, which acts as a survival benefit.

5) What are the diseases covered under term insurance plans?
Ideally, the policy documents state the amount and types of diseases covered under term insurance plans. After you purchase a term insurance plan, you should carefully read the terms and conditions, inclusions and exclusions. Moreover, analysing the policy document would ensure your claims aren’t rejected in the future. For instance, if you claim for a disease, which might not be covered under the term plan, your insurer won’t accept your claim.

6) Can I surrender my term insurance policy amidst the on-going tenure?
A term insurance policy only provides death benefits to your family. Hence, you should not surrender the term policy before the completion of the tenure. If you surrender the policy before the tenure, your loved ones would neither receive death benefits nor any other monetary benefits from your insurer.

In a nutshell, term insurance plans are the simplest form of insurance. Moreover, you can choose between numerous term insurance policies today. Therefore, see to it that you select the right policy based on your family’s requirements and financial needs. Choose an adequate coverage amount to ensure your family’s sustenance in the long run.