A term insurance plan is among the first purchases you should make for yourself once you achieve financial independence. A term plan is a relatively simple type of insurance plan. It is a valuable tool for monetary security. It offers you a sizable sum assured for a reasonable premium price.
Today, some insurers have even begun to provide attractive choices like the return of premium. This feature was absent from most term plans in the past and deterred individuals from buying them. Of course, term insurance tax advantages (applicable for taxpayers under the old tax regime) are yet another positive aspect.
When looking for term plans, you receive a quote price that includes several elements, including the type of cover, alternatives, and some required additions. You can also get an estimate of the quote with the help of the term insurance calculator.
Here are a few considerations for assessing an insurance quote you receive from a potential provider.
Features of a term plan -
First, let us understand what term insurance is. A term plan is a type of insurance that offers the insured life coverage for a predetermined length of time if the premium gets paid on time. If a family has one earner, term plan insurances are advantageous.
- Affordable:
The fact that term plans are affordable is one of the main reasons many individuals pick them. In an affordable price range, extensive term plans can be available that offer added benefits.
It’s convenient to check a term insurance calculator to find affordable price estimates for the term plan.
- Lump-sum maturity payout:
This benefit is only valid for premium return variants. Some term plan insurance plans reimburse the insured in one single amount for their premiums. The refunds don't attract taxes because they can be repayments of your payment. Therefore, you may receive the total amount without any deductions.
- Various premium payment options:
The premium payment options are also adaptable. Multiple types of insurance durations, premium payment terms, and premium payout intervals are available. The policyholder may relax knowing that they can pay the premium at their pace.
- Reductions in taxes
Term plan premiums enjoy tax breaks as per prevalent tax laws. You can deduct these expenses when filing your income tax returns. Some of these tax benefits may be applicable for taxpayers under the old tax regime only and not for those who have opted for the new tax regime.
5 things to consider when reviewing term plan quotes -
Now that you may know what term insurance is, let’s look at what to consider when reviewing term plan quotes.
- Age for entry and renewal:
If you want a term plan with a long-term tenure, the entry age can be important. The admission age is capped at the lower and upper end of 18 and 65 years old, respectively.
- Expense Amount:
The primary criterion for assessing the quality of your chosen term plan must be the premium payment. A too-high premium can eventually put a financial strain on your finances.
- Riders:
There can always be less costs associated with adding riders to the same term plan than purchasing separate policies. Therefore, if you wish to expand the scope of your primary insurance plan's coverage, having a rider option is advised.
- Policy timeframe:
Another aspect of a term plan that you must pay attention to is policy duration. A term plan should always have the longest possible policy length. With shorter premium payments, longer policy durations may give you life insurance coverage for a more extended period.
- Comparison of quotes:
Comparisons can help you choose the best policy out of all the options available by highlighting the many advantages of each term plan.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
Tax benefit is subject to change in prevalent tax laws.
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