A term insurance plan is an essential factor in your financial planning. The low and reasonable premiums of these plans afford you the ability to invest more of your income into your current finances while securing the future of those you love in the event of your demise.
These affordable forms of life insurance come with varying tenure options. You can choose short or long-term insurance from 10-100 years. However, the best term life insurance is one that is most suited to your financial needs and offers advantages that are tailored to you.
What are the types of term life insurance plans?
There are different types of term insurance plans available in the market based on your specific financial needs. Here are the top choices from which you can choose the best term life insurance for you and your loved ones:
- Level-term insurance remains unchanged throughout the policy tenure.
- Decreasing term insurance helps pay off liabilities and decreases the sum assured.
- Increasing term insurance helps deal with inflation by increasing the sum assured.
- Convertible-term insurance plans help convert a short-term plan into a whole life insurance policy.
- Term insurance with a return of premium offers maturity benefits on surviving the policy tenure.
Based on a careful analysis of your current finances and the goals of your loved ones, you can choose the best term life insurance plans for you.
Term insurance tax benefits
One of the most popular and desirable advantages of term insurance is its tax benefits. Upon meeting the specified criteria, insurance premiums and payouts can be tax exempted. Here are theterm insurance tax benefits that you need to consider when purchasing a plan:
- Under Section 80C of the Income Tax Act in India, the annual premiums that you pay towards term insurance can be exempt from taxes in the following scenarios:
The total annual premium is less than INR 1.5 lakhs.
The total annual premium is less than 10% of the overall sum assured guaranteed on the term life insurance plan. - Under Section 80D of the Income Tax Act in India, term insurance tax benefits are applicable to riders involving critical illnesses. That means if you are paying premiums on your policy to acquire additional coverage against a critical illness, then the amount is eligible for term insurance tax benefits up to:
INR 25,000 for those below the age of 60
INR 50,000 for those above 60 years. - Under section 10(10)D of the Income Tax Act in India, term insurance tax benefits are also applicable on lump sum payouts. Below are the conditions applicable to term Insurance tax benefits under Section 10(10)D:
The death benefit received by your beneficiaries in the event of your demise is exempted from taxes regardless of the overall amount.
The maturity benefit received if you survive the policy tenure is exempted from taxes if the annual premium is less than 10% of the sum assured every year of the plan validity.
Aside from the affordability of these plants, term insurance tax benefits make it a popular and advantageous choice for policyholders. Not only can you avail of the benefits of term insurance at a reasonable rate, but you also save money in the process during the span of your life.
Things to look for in the best term life insurance plan
Choosing the right kind of term life insurance plan is essential for your current financial planning as well as to secure the future of your loved ones effectively. Best term life insurance plan benefits you in the short and long run. Here are some of the things that impact how a policy becomes the best term life insurance plan for you:
- Convenient and affordable premiums that do not wreck your current financial plans.
- Adequate coverage to help support the dreams and goals of your loved ones and their livelihood in the event of your demise.
- Term insurance tax benefits that help you save money while affording financial security for your beneficiaries.
- Builds a substantial corpus if you survive the policy tenure and receive the maturity benefit.
- Sufficient tenure to live a long and healthy life with your loved ones while knowing that the unprecedented and undesired event will not disrupt their lifestyle.
- Settling liabilities that impact your present and your family’s future.
The best term life insurance plan will help you cope with financial stress. It will provide peace of mind knowing that those you love will be well taken care of even in your absence. It also instils means to preserve your money while assuring a good future for your beneficiaries.
You must choose the best term life insurance that meets the basic requirements of your beneficiaries while awarding them sufficient cover to pursue their goals and set up their life without you.
