Categories Finance

What Are the Advantages of Term Insurance Over Other Types Of Insurance?

These days, it is hard to decide which insurance to buy. With a plethora of types available, how do you know which is the best for you? Each type of insurance has its own perks and setbacks. Also, there is no one type of insurance that perfectly fits the needs of everyone. These days term insurance has gained quite a popularity amongst buyers. Here are some reasons people prefer to buy a term plan over other life insurance –

Have comparatively affordable premiums

When you are calculating the premium on a term insurance premium calculator, you will notice a difference. Compared to other types of insurance, term insurance has a lower premium for the same amount of cover. It is one of the biggest advantages of buying a term plan. An affordable premium ensures that a huge chunk of your income is not used in paying the premiums for your policy. Also, with an affordable premium, you can pay premiums with ease in difficult financial times, too. As to retain a policy, the most important thing is to pay premiums on time. Hence, several people prefer to buy term insurance because of its affordability.

Offer advantages to young buyers

There are slim chances of the young population having their lives at stake. It might seem impractical for them to invest in life insurance policies that cost high premiums. They would rather invest their money somewhere else where they get returns. However, they need to have insurance to secure their lives. Hence, when young people compare term insurance v/s other types of life insurance, they are impressed by the low premiums. It is easy to buy insurance with a fixed term and low premium. Also, the lower your age is, the less your premium is likely to be. Term insurance is a perfect buy for the youth as they can insure themselves with less money.

Easy to interpret

One of the biggest reasons behind the increasing purchase of term insurance is how simple and easy it is to understand. Any individual who buys a term plan understands that they will get a life cover for a fixed period. Also, if anything was to happen to them in that period, their nominee would get the sum assured. The uncomplicated process compels people to buy term insurance.

Offer a higher coverage

When you compare term insurance vs other types of life insurance, you realise that term insurances usually offer a higher coverage compared to other traditional insurances. The amount of cover is one of the primary deciding factors while selecting a term policy. Hence, a term plan is preferred by several individuals, as it provides high coverage for low premiums. Talk about the best of both worlds!

Helps to save taxes

When you have purchased a term plan, along with securing the lives of your loved ones, you can save taxes too. Here are some tax benefits you can avail for when you buy term insurance.

Section 80C of the Income Tax Act – You can claim a deduction of up to Rs 1.5 lakhs against certain investments and security, including term insurance. The premium that you pay for your term plan can be deducted from your taxable income.

Sedition 80D of the Income Tax Act – If in your term insurance you have opted for a critical illness rider, you can claim the premium you paid for it. You can claim deductions of up to Rs. 25,000 under this section

Section 10 (10D) of the Income Tax Act – During the pay-out of the insurance cover in case of your sudden demise. This section completely exempts taxes of the sum covered.

Has a fixed premium amount

The relief factor of Term insurance is that the premium you pay this year, next year, or the year after that, will be the same. Premiums being locked is a beneficial feature of a term insurance plan. As you age, the inflation rates increase, and expenses increase. However, you will have the same amount of premium to pay until the end of the policy’s tenure.

As discussed above, when you buy a term plan, you will seek plenty of benefits. The best one will provide a life cover with low premiums and high coverage. Several people compare different term plans by using the term insurance premium calculator. It reflects the amount of premium your insurer requires you to pay to continue your policy. It is advisable to compare your options before finding the best one for you.