- Life Coverage
- Multiple Payout Options
- Tax Rebates
Himanshu is a content marketer with 2 years of experience in the life insurance sector. His motto is to make life insurance topics simple and easy to understand yet one level deeper for our readers.
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Updated on Apr 22, 2025 7 min read
What are the Benefits of Term Life Insurance?
Term insurance is the most affordable form of life insurance that offers financial coverage to your family in case of your uncertain death during the policy tenure. Along with financial coverage, there are several other benefits of term insurance including low-cost premiums, long-term coverage, tax benefits, multiple payout options, and a lot more.
Let’s understand each of the benefits of a term insurance plan in detail:
Financial Security
The most common benefit of a term insurance plan is financial security for your loved ones. In case of your uncertain death during the policy tenure, your family will receive the sum assured chosen at the start of the policy. They can use the amount received to fulfill their financial responsibilities such as debt repayment, higher education, marriage, buying a home, etc. Buying a term life insurance plan is the first step to achieving financial freedom.
High Coverage at Affordable Premiums
A term plan is the most economical life insurance plan as it provides high coverage at an affordable cost. You can get a 1 crore term insurance plan starting at monthly premiums of just Rs 600. The earlier you buy a term plan, the lower your premium amount and vice versa. The affordability of term insurance is one of its major benefits. Buying term insurance online is cheaper as compared to buying it offline. Moreover, you can compare various plans online and choose the one that best suits your needs. You can calculate your term insurance premiums using a term insurance calculator.
Multiple Premium Payment Options
With a term insurance policy, you have the option to choose how you wish to pay your premiums. There are various premium payment modes available including yearly, half-yearly, quarterly, monthly, or a single premium. You can choose the mode of payment that best suits your requirements. There are multiple payment methods available including debit cards, credit cards, UPI, Bima ASBA, net banking, etc.
Rider Benefits
Term insurance provides you an option to choose additional riders with your term plan. These riders enhance the coverage of your term plan. Each rider benefit provides specific benefits and costs you an additional premium amount along with the base premium. For example, an accidental death benefit rider provides an additional sum assured to your family in case of your death due to an accident.
Tax Benefits
A term insurance policy offers tax benefits on the premiums paid and death benefits received in case of the policyholder’s uncertain death. The tax benefits are offered under Section 80 (C) and Section 10 (10D) of the Income Tax Act, 1961.
Tax Benefits Under Section 80 (C)
You can claim tax benefits on the premiums paid under Section 80 (C). The maximum amount you can claim is Rs 1.5 lakhs per financial year.
Tax Benefits Under Section 10 (10D)
The death benefits paid under term insurance plans are completely tax-free under Section 10 (10D).
Choice of Death Benefits Payout
There are various death benefits payout options available including lumpsum, regular income, or a combination of lump sum and regular income. You can choose how your family will receive death benefits at the time of policy purchase. The payout option of an individual depends on their financial goals. A lump sum amount can help you meet known financial liabilities while regular income may help you meet your regular expenses.
Return of Premium Benefits
A pure term plan does not offer any maturity benefits. But term insurance with return of premiums (TROP) pays all your premiums back in case the policyholder survives the policy tenure. The premiums returned do not include the GST amount, rider premiums, etc. The premiums paid for TROP plans are comparatively higher than pure term insurance plans. With a term insurance calculator, you can compare the premiums of various plans and decide which one is right for you.
Terminal Illness Benefits
Some term insurance plans come with an inbuilt terminal illness cover. In case you are diagnosed with any of the terminal illnesses mentioned in the policy brochure, terminal illness benefits are paid to the policyholder.
Income Benefits
A term insurance policy provides income benefits to your loved ones in case of your uncertain death during the policy tenure. Your family will receive regular income if you opt for regular income as a death benefits payout. A regular income helps your family to meet their living expenses and other financial responsibilities.
Whole Life Coverage Benefits
Certain term plans offer protection for the whole life (99 years). These plans are also called whole life insurance plans. The premiums for whole life term insurance plans are usually higher than a term insurance plan with limited coverage.
Benefits of Buying a Term Insurance Plan Early
Buying a term insurance plan early offers multiple benefits to the policyholders. Let’s understand these advantages in detail.
Lower Premiums
The major benefit of buying a term insurance plan early is low premium cost. The premiums are low at a young age because the risk associated is low. If you buy the same term plan at a later stage in life, the premiums would be comparatively higher.Let’s understand this with a simple premium table.
Policyholder’s Age Monthly Premiums 20 years Rs 715 30 years Rs 1174 40 years Rs 2570 50 years Rs 5090 As the policyholder’s age increases so are their term insurance premiums.
Longer Coverage
Buying a term insurance plan early provides you with longer coverage. You can avail of coverage for 20, 30, or even 40 years by purchasing a term insurance plan early in life. It ensures that you are covered at important stages of life including marriage, childbirth, or even retirement.Peace of Mind
Buying a term insurance policy early offers you peace of mind as your loved ones are financially taken care of even in your absence. You can focus on your growth knowing that your loved ones are secure.
Rider Benefits You Can Avail With Term Insurance
You can avail of the following riders with your term life insurance plan. You must choose the rider option that best suits your needs as each rider costs you an additional premium amount.
Critical Illness Rider
This rider pays the sum assured in case the policyholder is diagnosed with any of the critical illnesses listed in the plan brochure. The benefits can be used to pay medical bills and other expenses.Terminal Illness Rider
Under this rider, benefits are offered if the policyholder is diagnosed with any of the terminal illnesses mentioned in the plan brochure. The sum assured can be used to pay various expenses.Accidental Death Benefit Rider
In case of the policyholder’s death due to an accident during the policy tenure, the rider benefits are paid to their nominee in addition to the base sum assured.Waiver of Premium Rider
This rider waives off all the premiums in case the policyholder loses their income due to disability or critical illness. The policy will continue despite the premium waiver.Accidental Total and Permanent Disability (ATPD) Rider
The rider provides a lumpsum sum assured in case the policyholder faces total & permanent disability due to an accident.Income Benefit Rider
An income benefit or income replacement rider offers a fixed part of the sum assured as monthly income to the policyholder in case they lose their income due to disability or death.
Why Should You Purchase a Term Insurance Plan?
Life is very uncertain and certain things are not in our control. You should buy a term insurance plan as it ensures that your loved ones are financially protected even if something unfortunate happens to you. It is the best investment you can do for your loved ones. There are a lot of term insurance plans available in the market but you should choose a term plan that fits your budget and aligns with your financial goals.
Conclusion
The major benefit of a term insurance plan is financial security for your loved ones in your absence. Along with financial coverage, a term insurance plan offers multiple benefits to the policyholder. These benefits include affordable premiums, tax benefits, high sum assured, flexible policy tenure, choice of premium payment mode, and a lot more. You must choose a term insurance plan with the right sum assured to make sure that your family is financially covered in your absence.
If you are looking for the best term plan you can contact us at PolicyX.com. One of our insurance experts will understand your requirements and help you choose the right term life insurance plan. We offer No Spam, No Gimmicks, and Only Xpert Insurance Advice.
FAQs: Benefits of Term Insurance
1. How early can I buy a term insurance policy?
You can buy a term insurance plan as early as 18 years of age.
2. What are the benefits of term insurance?
Term insurance offers a death benefit, tax benefit, affordable plans, return of premium, accidental death benefit, critical illness benefit, and much more.
3. Is it good to invest in a term insurance plan?
Yes, investing in a term insurance plan is a good decision as it offers financial coverage to your loved ones in case of your death during the policy tenure.
4. What are the tax benefits of term insurance?
You can claim a tax rebate of up to Rs 1.5 lakhs on term insurance premiums paid under Section 80 (C) and death benefits received are completely tax-free under Section 10 (10D) of the Income Tax Act, 1961.
5. What are the rider benefits?
A term life insurance plan allows you to choose additional riders to increase your plan coverage.
6. Does term insurance offer maturity benefits?
Maturity benefits are not included in the traditional term insurance plans. However, some policy types such as term insurance with return of premiums give back the paid premiums, upon the policyholder surviving the total policy terms.
7. How to choose a good term insurance plan?
To choose a good term insurance plan you must consider factors like your dependents, income, lifestyle, liabilities, CSR of the company, riders of the desired plan, and policy tenure offered.
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Written By: Himanshu Kumar
Himanshu is a seasoned content writer specializing in keeping readers engaged with the insurance industry, term and life insurance developments, etc. With an experience of 2 years in insurance and HR tech, Himanshu simplifies the insurance information and it is completely visible in his content pieces. He believes in making the content understandable to any common man.
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