Life is full of uncertainties and sometimes beyond our control. While it’s good to take all the required measures to keep ourselves hale and hearty, we cannot rule out any unfortunate eventuality that may cross our path. However, to deal with turbulent times in a better way, and to secure the future of our loved ones, we can always rely on a term life insurance policy. Term life insurance is a type of life insurance that offers coverage to the policyholder for a specific duration. In case of untimely demise of the policyholder during the policy term, the death benefit is paid by the company to the beneficiary. Therefore, term life insurance is an ideal insurance product for those who wish to safeguard the future of their family, even in their absence. While purchasing a term insurance, several individuals face a dilemma as to what maturity benefit they would receive on surviving the policy term. Below, we are going to shed lights upon the same:
What are the maturity benefits in term insurance policy?
If a policyholder purchases a term insurance policy and survives the policy term, he/she won’t receive any survival or maturity benefits. In addition to that, there won’t be any return on investment in case of pure term life insurance. Pure term life insurance is solely designed to take care of the financial needs of your family in case of your unfortunate and untimely demise. The lump-sum amount obtained as a death benefit can help compensate for the loss of income and allow your family members to manage their expenses even in your absence. Many individuals are reluctant while purchasing a pure term insurance policy as it doesn’t offer any maturity benefit.
However, by purchasing a term plan with return of premium, policyholders can obtain the premiums paid during the policy term as the maturity benefit. Apart from providing life coverage, term plan with return of premium can prove to be a great investment option as well. The amount obtained on maturity can be used to fulfil financial goals such as purchasing a car, funding international trip, etc. It is to be noted that the premium for a term plan with return of premium is comparatively higher than regular term plan. Another benefit of a term plan with return of premium is that its coverage can be enhanced by opting for riders. Policyholders can opt for add-ons such as accidental death, accidental disability and critical illnesses, etc.
Term insurance tax benefits:
Term insurance with return of premium also has some tax benefits, which are mentioned below:
Under Section 80C of the Income Tax Act, 1961, the premiums paid for a term insurance policy with return of premium are eligible for tax deductions of up to Rs 1.5 lakh per annum. Additionally, the amount obtained on maturity is exempt from income tax under Section 10 (10D) of the tax laws.
Now that you have a fair understanding of various aspects of term life insurance, make the most of it to ensure the financial well-being of your loved ones. While purchasing term insurance, you must calculate the premium of your policy by using a term plan premium calculator. This will help you avail a term life insurance that has an affordable premium and optimum coverage. Also, make sure that you renew your insurance policy timely and avoid its lapse. With leading insurance providers, you can easily purchase a term life insurance online and renew it from the comfort of your home. You can also track the status of your insurance policy online. Lastly, make sure that you compare various term life insurance plans offered by different insurance companies before purchasing a policy. This will help you avail the best deal for yourself.