What is a term life insurance and how is it different from other types of life insurance?

Term Life Insurance and its Meaning

A policy is said to be term life insurance if it offers coverage for a predetermined amount of time, often known as a "term." People who require coverage for a specific period may benefit from purchasing a policy of this kind because it is often more affordable than permanent life insurance policies. It is a type of temporary life insurance in which the beneficiaries will get a predetermined sum if the insured person passes away within a predetermined period. Suppose the owner of the policy does not pass away during the period of the policy. In that case, they can either let the insurance expire, convert it to a permanent life policy, or renew it. Sometimes, people will refer to term insurance online as "pure life insurance."

Here are six reasons why term plans are unique and why you should consider purchasing one for yourself:

Need for Fulfilment

We need to compare term insurance plans, as each is designed to meet a specific requirement that the insured individual may have. The goal of an endowment policy is to encourage the insured person to save money and provide maturity benefits. In contrast, a unit-linked plan (ULIP) aims to build wealth while minimizing tax liability. On the other hand, a pure-term cover protects against the potential loss of income, which can throw a kink into the family's financial plans and make it more challenging to fulfill debt obligations.

Tenure

Most endowment and repayment plans of term insurance online begin contributing to the beneficiary's income after retirement, often between the ages of 55 and 65. At the age of maturity, the insurance benefit is no longer payable. Term and whole life insurance plans are available until 100; however, a whole life policy premium is significantly more expensive than a term plan.

Term Insurance Premium

The most cost-effective form of term insurance online is called a term cover. Most alternative life insurance plans can be significantly more expensive than the premium for a straightforward term cover. Depending on the maturity advantages, bonus, and payment options, this difference can be many times greater. On the other hand, a term plan is available at a completely reasonable price, making it the best option, particularly for younger people.

Flexibility

Compare term insurance plans to know how it can be obtained with relatively little effort. In certain instances, all that is required is to fill out a straightforward online form and undergo a medical examination. If you want to do so when you first purchase the policy, you can expand the coverage later to accommodate your shifting requirements and ambitions. It is easy to give up a term policy too. The policyholder can stop making payments at any time, in which case the policy will expire.

Term Plan Tax Benefit

Under Section 80C, tax breaks of up to INR 1.5 million are available to policyholders of all life insurance plans. A term cover offers a death benefit at a much more affordable premium and maintains a balance deductible value greater than 90 percent following Section 80C. The same principle can be used for various items, such as retirement plans, mortgage payments, and so on.

Wrapping Up

A comprehensive financial strategy needs to include several life insurance products. If you want to provide financial security for your loved ones at a manageable price for their budget, purchasing a term plan is your best option.