What is Term Insurance and How Does It Work?
Term insurance is a simple and affordable life insurance product that provides financial protection to your family for a specified period. If the policyholder passes away during the policy term, the nominee receives the sum assured. If the policyholder survives the term, there is usually no payout.
How Does Term Insurance Work?
- Choose Coverage & Term: Select the sum assured and policy duration based on your needs.
- Pay Premiums: Pay regular premiums (monthly, quarterly, or yearly) to keep the policy active.
- Life Cover: If the policyholder passes away during the term, the nominee gets the death benefit.
- No Maturity Benefit: If the policyholder survives the term, there is no payout (unless you opt for return of premium plans).
Key Benefits of Term Insurance
- High coverage at low premiums
- Financial security for your family
- Flexible policy terms and sum assured options
- Tax benefits under Section 80C and 10(10D)
- Optional riders for critical illness, accidental death, and more
Who Should Buy Term Insurance?
Anyone with financial dependents should consider term insurance. It is especially important for young professionals, parents, and those with loans or other liabilities.
Conclusion
Term insurance is the foundation of a sound financial plan. It ensures your loved ones are protected from financial hardship in your absence, giving you peace of mind.