Are you the one who is living his life to the fullest with spouse, children, and parents? Every time you go out of your home, you start missing them and when you are back at home you find them eagerly waiting for you? Well, you are a lucky man! However, many people were living this life, and then all of a sudden they passed away. The reason for death can be many but what is worse is the circumstance the families have to deal with. We cannot control what is coming in our future but we can surely plan it so that our families can at least be sure that they have money to carry on their regular life. And to do so, the best thing that you can do is choose a term insurance plan. Here are some advantages and disadvantages of term insurance plans that will help you to understand the concept better.
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Advantages of term insurance plan
The benefits of a term insurance plan will surely make you go for one. Let us check out some of them:
Affordable
A term insurance plan is one of the most cost-effective insurance products that is sought by many. Even if you buy a high sum assured plan, you will be required to pay affordable premiums. The cost of premiums for term insurance is way lesser than the premium of any other life insurance product.
Flexible
The term insurance plans are known for being very flexible. You can not only renew them but can also convert them. If after some years, you feel like increasing the sum assured of the term plan, you can very easily do that by contacting the insurer. You can also switch to a new term insurance plan without any problem.
Simple
Term insurance policies are known for being simple, so much that even people with no idea of insurance can understand them. You just have to pay the premiums and the beneficiaries will get the sum assured on your sudden demise.
Tax benefit
As you buy a term insurance plan, you can actually avail yourself of the tax benefits that come along with it. Under Section 80C of the Income Tax Act, you can enjoy the tax benefits.
Disadvantages of term insurance plan
While there are so many pros of buying a term insurance plan, there are some cons as well that come with them. Let us discuss them too:
No maturity benefit
One of the major cons of purchasing term insurance is that you will not get any maturity benefit from it. If you survive through the policy term, you will not get any maturity benefit. The benefit of the plan can only be availed if the policyholder passes away.
Premiums are costly if you are old
If you are buying the term insurance plan at a later stage of life, you have to pay a higher premium. This is also the same for people who have medical conditions or illnesses. Also, if you are a smoker, you have to pay higher premiums as compared to an individual who does not smoke.
No benefit to the policyholder
You as a policyholder cannot reap the benefits of the term insurance policy. It is actually meant for the family of the policyholder who needs financial support when the policyholder is not there anymore.
While you are buying a term insurance plan, make sure you check the claim settlement ratio of the insurance company. This will give you a good idea of the chances of successfully claiming the sum assured by the nominees. To know the kind of term plans that exist in the market, you can visit the website of IIFL. You can take your time to compare and decide which term insurance plan to go for.
