As compared to other types of life insurance, term insurance plans are the simplest and the most beneficial form of insurance product. Be it consumer or financial experts, term insurance plans are preferred by any over other life insurance plans. One of the major reasons why the LIC term plan is a better insurance option is that it offers a higher sum assured amount at very low premium rates.
Term insurance plans are particularly designed in a way to provide financial protection to the family against unforeseen circumstances. Life insurance plans are generally known as protection plans. While life insurance plans offer a wide variety of options to the buyers, a term insurance plan offers life coverage with no saving or profit component. Term insurance plans are best for those insurance buyers who just want to have a life cover without any savings. Moreover, these plans are one of the most affordable plans and can be availed easily in a hassle freeway. Besides this, to validate the point that why one should have term insurance plans, here we have discussed briefly some of the benefits of term insurance plans.
The major reasons why you should buy LIC term plan are as follows:-
1. Simplicity- As compared to ULIP or endowment plans, term insurance plans are much simple and easy to understand. Under the LIC term plan, one has to pay the whole premium once and get covered for the term chosen. It can really get complicated to plan financial goals around cash value insurance plans. Generally, it gets difficult for an individual to divide the premium into risk cover cost and savings. But a term insurance plan simply provides life coverage so, there is no risk involved in it.
2. Competitive Pricing- As term insurance plans are simpler and have the same structure they can be compared easily based on price. With the growing demand for term insurance plans, it is rapidly emerging as a commodity. To choose the best insurance policy, you can compare the quotes online and choose the most suitable plan for yourself. As compared to cash value policies, term insurance policies are more price-competitive as buyers suffer fewer information problems.
3. Flexibility- LIC term plan provides more flexibility than the cash value policies. Under term plans, if a person stops paying the premium, the risk coverage stops as the policy ends. Cash value policies provide the survival benefit only after the completion of the whole tenure of the policy. If you stop paying the premium midway, you can go through financial loss as you will not able to recover the saving portion without any deduction.
Moreover, numerous term insurance policies can be renewed as well as can be converted. One can also change the term insurance plan into an endowment plan. The insured person will just have to pay the extra premium and the sum assured amount will remain the same.
4. Tax Benefit- The premium paid for the term insurance policies provides tax exemption under section 80C of the Income Tax Act. However, in endowment plans, as the premium rates are high one gets more benefit under section 80C of the Income Tax Act. Moreover, endowment plans also provide tax benefits on the maturity claim under section 10(10D) of the Income Tax Act.
5. Lowest Premiums- As compared to the other life insurance policies, the premiums for term insurance are much less. For example- if a 30-year-old person buys a term insurance policy of 20 years tenure for the sum assured amount of Rs.10,00,000, then he/she will have to pay an annual premium of Rs3000. Similarly, if a person takes an endowment policy, then he/she will have to pay an annual premium of Rs.30,000 and if it is an endowment with-profit policy, then the yearly premium will be about Rs50,000.
In case you have taken a large loan like a home loan or car loan. Then buying a term insurance plan is beneficial, as you can cover the risk by repaying all the loans with the help of a term insurance plan, which is cheaper as compared to the other types of insurance plans. In the case of uncertain demise of the insured person, the plan not only provides a death benefit to the nominee of the policy. Additionally, it can also be used to cover the risk of business loss due to the untimely death of the policyholder.
However, while purchasing a term insurance policy, there are certain aspects that should be kept in mind like determining the coverage you need for your family members and life-stage, assess your needs and budget, claim settlement ratio, the income factor, rider, choosing the right insurer and online purchase.
With all these Benefits Offered by LIC Term Plan, it is certainly one of the most beneficial plans as compared to other insurance plans. Having a term insurance plan from LIC is the best way to provide financial security to your loved ones in the most affordable way.