The financial safety of loved ones is the biggest worry of every individual, especially for people who have several dependents and family members. To ensure the dependents’ finances remain unaffected even after their untimely demise, an individual invests in various plans. But it is not necessary that the plan will be transferable to the dependent or they will get assured returns. To ensure guaranteed returns, one can always invest in term plan insurance. These plans provide assured returns to the nominee while adhering to the plan’s terms. Read on if you are here for more knowledge on such plans. Here you will find all the basic knowledge of erm plan insurance and its features.
Term Plan Insurance
A term plan insurance is the most basic form of life insurance. As the name suggests, it is valid for a fixed and pre-decided term. Not every person needs to be knowledgeable enough to choose insurance and read and understand the policy terms. So to cater to the population who don’t have the time or resources to invest in knowing the plan conditions, IRDAI introduced this term plan insurance. IRDAI is the insurance regulatory board in India and overlooks all the insurers in the country. They also overlook term insurance plans and decide how term insurance works. Under this plan, also dubbed Saral Jeevan Bima Yojana, anyone can obtain life insurance with better prospects and lesser chances of claim rejection.
Top 6 Features of Term Plan Insurance
Every term plan insurance has to follow a basic set of rules set forth by the IRDAI. So, most features of such plans will be the same, even across various insurers. A benefit of such uniformity is that the customer can select a plan from these without worrying about complications during claim application. This is possible due to the basic set of rules without many exclusions and pure individual risk definition of the policy. Six main features of such policies are given below in detail.
Relatively Smaller Duration of Investment
Term insurance is valid for only ten years. And after this duration, the policyholder will have to extend the plan for a set number of years repeatedly. Limited payment options also have an option of five-year plans and ten-year plans. So, these are very smaller durations than other investments, especially insurance plans.
Lesser Premium Burden
Term plan insurance is a basic policy, so they lack the money-back clause. And the policyholder will not get any maturity amount at term-end in case of survival. But this reason makes the policy’s premium amounts to be low as well. Having a low premium will help policyholders pay only a small portion of their savings, giving them financial freedom despite spending money on insurance.
High Death Benefit
The death amount payment of term plan insurance is mainly in three types. The first is a return of ten times the policy’s annual premium. The second is 105% or 125% of the total premiums paid based on the premium payment mode. And the third option is the return of an absolute amount as mentioned in the policy papers. But considering the fact that the premium paid is extremely low, these returns provide a higher range of return amount to invested amount ratio.
These term plan insurances are mostly used as endowment plans for dependents, children, or nominees. In case of the policyholder’s sad demise, the policy’s nominee will get the death benefit amount. Thus, providing them endowment funds in the absence of the policyholder. An endowment is a great feature for individuals who are the single earning-members in the family or have many dependents.
Easy Payment Options
The payment options of term plan insurance are also easy. There are basically three types of payment. Regular payment – where the policyholder must pay premiums as long as they are eligible for insurance. Limited payment – where they must pay premiums for a limited duration, like five or ten years. And single payment – where they must pay only a one-time payment. Insurers also provide several modes in regular and limited payment like paying for every month, quarter, or year. And the policyholder can also make these payments from various modes like online payment, online transfer, cheque, cash, etc.
Even though there is no return on invested capital, a great benefit for taxpayers from term plan insurance is the tax savings. A taxpayer can deduct up to INR 1,50,000 per annum from their taxable income, reducing income tax. These deductions help further reduce the burden of premiums on the finances.
These features of term plan insurance are very beneficial considering the fact that they are basic and the cheapest plans. You can find such basic life insurance products from every major life insurer in India. One such great plan is the Max Life Insurance Saral Jeevan Bima Plan. They provide one of the highest death benefits as compared to other plans. So make use of these plans from Max Life Insurance today to ensure the financial safety of your loved ones.