What is the meaning of term insurance?
Term insurance is a type of life insurance policy in which the sum assured is provided in the form of death benefit to the nominee of the policyholder in case of accidental death of the policyholder during the policy term. At the time of purchasing the policy, the policyholder can choose the nominee as well as choose the sum assured keeping in mind his financial requirement.
You are also provided with the option of increasing your term coverage in term insurance plans. You can further enhance your term insurance coverage by adding riders to it. For these riders, you have to pay some additional premium to the insurance company. In this, you get the option of adding riders like Accidental Benefit Rider, Disability Rider, Critical Illness Rider, Terminal Illness Rider, Waiver of Premium Rider.
In term insurance plan, you also get many options for premium payment. You can choose to pay your premium payment as a single premium, annually, half-yearly, quarterly or monthly.
It is worth noting that in term insurance plans, if the life assured survives till the end of the policy term, then no maturity benefit is provided to him. In term insurance plans, the death benefit is provided to the nominee only in case of death during the policy term.
However, now such term insurance plans are also available in the insurance market in which you can get the maturity benefit at the end of the policy term. In this, all the premiums paid by you are returned to you at the end of the policy term (Return of Premium) . You have to pay an additional premium to avail this facility.
A term insurance policy also provides you an opportunity to avail tax benefits. In this you bike Indian Income Tax Act. Can get tax exemption under section 80C and 10 (10D) D of 1961.
You are given the benefit of tax benefit up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961, on the premium paid for term insurance plans. While the death benefit received is tax exempt under section 10 (10D) of the Income Tax Act, 1961.