What are the benefits of buying Long-term Term Insurance Plans?
No matter how much you plan, there is always a risk of things not go in your direction. It is the same while planning the future of your family members too. The only financial product that protects your life from such risks and offers financial security for the entire family after your demise is term insurance. It is why such plans are ranked high and recommended by financial advisors to those who choose to secure their family’s future for the long term.
Priyanka is a 30-year-old chartered accountant living with her parents in Bangalore. She has recently purchased an apartment with a home loan. The bank manager, her friend, suggested she buy term insurance since her net worth was increasing, and she needed some financial security to cover her investments in case of any unfortunate event of death or illness. This advice made Priyanka purchase a term plan with a sum assured of 75 lakhs with a 30-year term. To protect herself from critical illnesses, she also opted for a critical illness rider with a sum assured of Rs 10 lakhs.
At the age of 50, Priyanka is diagnosed with kidney failure and advised of an immediate operation. Without wasting any time, she utilized her critical illness rider to get ten lakhs as a lump-sum amount that was used towards hospitalization and post-treatment costs. In 3 months, she recovers entirely and gets back to duty. Priyanka did the right thing by availing the critical illness rider along with the term policy, taking into account her long-term health benefit, without which it will not have been easy to finance her treatment costs.
There are many types of insurance policies that one can choose based on their individual needs. Still, it is essential to understand that investing in a long-term insurance plan with a longer tenure has maximum benefits than other insurance types that assure returns in the short term.
6 Major Benefits of buying long-term Term Insurance Plans
- More Extended Coverage
- Lower Premiums
- Protects Against Uncertainties of Life
- Benefits Payout Options
- Plan for Life Events
- Save on Income Tax
Insurance companies are now offering term insurance plans that provide life coverage till the age of 85 years to 100 years. While some may call it a burden during old age, there are some valid benefits as well to buy these long-term insurance plans, which are explained below:
1. More Extended Coverage
By opting for a long-term insurance policy, you can be assured of staying protected for a more extended period. This is particularly helpful for individuals who have to support their dependents even in their old age. If they encounter death before the end of the policy term, their dependents shall get the benefit amount, taking care of their financial needs. Furthermore, suppose you are availing of a policy with a high assured. In that case, it is even more beneficial in the long term since you can be sure of the family to maintain the same lifestyle even after your absence.
2. Lower Premiums
The premium for a long-term policy remains the same for the entire term. With the tenure on the higher side and satisfying the necessary health conditions, some insurers also offer discounts or rebates on the premium amount. This makes you opt for higher coverage and also leaves you with more cash for other expenditures.
3. Protects Against Uncertainties of Life
One of the term insurance benefits is the ability to safeguard yourself from unfortunate events that might happen to you in life, apart from providing a death benefit. There are riders like permanent disability benefit rider, Critical illness benefit rider, accident benefit rider, premium waiver rider, etc., which can be added to the base policy on payment of additional premiums. They ensure a complete cover for a longer-term, against any unfortunate eventualities such as accidents, terminal illness, disability, etc. For example, the critical illness rider covers you against critical diseases like cancer, brain tumor, blindness, loss of limbs, etc.
Also Read: What kind of deaths are covered or not covered in term life insurance?
4. Benefits Payout Options
If you have opted for a long-term term plan, you may choose an appropriate payout option for your family to receive the death benefit payable on your demise. While some may prefer lump-sum payment, others shall prefer a monthly income or a combination of both. The policyholder can exercise these choices at the time of applying for the policy. Some of the standard options provided by insurers in terms of benefit payouts are:
- Lump-sum payout: 100% of the sum assured shall be payable in a lump sum on the policyholder’s death.
- Lump-Sum + Regular Monthly Income: A certain percentage is released as a lump sum while the other half is paid as monthly level income in equal installments.
- Lump-Sum + Increasing Monthly Income: A specific lump sum amount is paid initially, and the remaining is paid every month, which increases at a particular rate regularly for a given period.
- Regular Income: Under this option, the benefit amount is paid in equal monthly installments for a pre-decided time.
5. Plan for Life Events
When you decide to purchase a long-term term insurance plan, it means you are looking to create a corpus for your family to fall on in case of your demise. During the policy term, you will need to go through important milestones such as children’s education, marriage, retirement, etc. It might not be possible to buy separate policies then. Hence, a long-term plan will provide the necessary cushion to handle these significant life events.
6. Save on Income Tax
The other significant advantage of taking up a long-term policy is the income tax benefits that one is eligible for a longer duration of time. The premiums paid towards the term plan qualify for income tax benefits, as per Section 80C of the Income Tax Act, 1961. Furthermore, as per Section 10 (10D) of the Income Tax act, death benefits received by the nominee are exempted from tax payment.
Therefore, plan for term insurance in your life as early as possible to avail the maximum benefit out of it. It secures your future and gives you peace of mind in the present. Opt for the right term insurance policy by visiting iiflinsurance.com.
