Why should I buy term insurance?

You should buy term insurance to ensure financial security for your family, avail tax benefits, and enhance coverage with riders for scenarios like critical illness or accidents.

What are the tax benefits of term insurance?

Under Sections 80C and 10(10D) of the Income Tax Act, you can claim tax deductions on the premiums paid and on the payout received by your nominee.

Level up with term insurance

Q: What is term insurance?

Term insurance is a pure protection plan that provides financial stability to your family in case of your unfortunate demise by offering a fixed sum assured.

Life is utterly unpredictable, and you never know what curveballs it can throw your way, hampering even the most well laid out plans. This is where term insurance steps in, offering a protective shield for your loved ones’ futures. It offers them financial security in your absence, for all their future needs and goals.

Let’s understand how term insurance works and why you should buy it.

What is term insurance?

Term insurance is a pure protection plan. In other words, it’s a way to ensure financial stability against any life risks.

When you buy term insurance, you enter into a contract with the insurance company. The insurance company promises to pay a fixed amount of money to your family in case of your unfortunate demise. This sum will help them cope with financial obligations like day-to-day expenses, future life goals, pending debts, and more.

In exchange for the coverage and benefits the insurance company offers, you are required to pay a fee known as the ‘premium’.

Let’s understand this with an example:

Jayant, a 35-year-old male, has a dependent spouse and child. He has also taken a home loan of Rs 35 lakhs. He buys a term insurance plan to make sure his family has financial backup in unfortunate situations.

Jayant buys the plan in 2025 with a cover amount of Rs 1.5 crores and a policy term of 30 years. He appoints his wife, Rekha, as the nominee.

Let’s assume that he passes away in 2040 due to a road accident. Rekha receives a payout of Rs 1.5 crores, with which she can pay off the remaining home loan, fund their child’s education, and take care of their daily needs.

Why should you buy term insurance?

Here a few reasons why you should consider getting a term insurance plan:

1. Financial stability

Term insurance is a pure risk protection plan. So, that your family will have a steady financial safety net in place during unfortunate situations. They can use this money for their dreams and needs, no matter what life brings

2. Riders

You can also pick riders along with your term insurance plan for wider coverage. These add-ons come at an extra cost and cover specific situations like accidents, critical illnesses, etc.

3. Tax benefits

Investing in term insurance also gives you/your nominee a chance to avail of tax benefits on both the premium you pay and the payout it gives – under Sections 80C and 10(10D) of the Income Tax Act.