Imagine you are 30 years of age and earn a limited income but have a wife and child to support. You are the sole breadwinner of the family and in constant stress about what will be your family’s future in the event of your untimely death. The best way to mitigate this stress is to purchase a life insurance policy.

However, numerous life insurance companies are offering you with so many options! Term insurance, endowment plans, unit-linked plans, money back plans, and so many more. What is the right decision to take? What plan to opt for? All the life insurance plans provide you with tax^* benefit under Section 80C of the Income Tax Act 1961; so, what plan do you think you should opt for?

For individuals with limited income, it is preferable to choose a term insurance plan. These plans are very cost-effective and offer high coverage at meagre premium costs. To better know why term insurance, you need to understand what term insurance is. 

Term insurance is where the insured pays a fixed sum of money or premium at regular intervals for a specific term or period. In return, the insurer agrees to pay the sum assured to the insured’s beneficiaries post their demise during the specified policy’s term. This means if one survives during the term, the term insurance will not provide any maturity benefit. However, many insurance companies have now come up with new plans where the insured would be eligible to receive a percentage of his premium as a maturity benefit. 

There are several reasons as to why term insurance is considered to be one of the most sought after and cost-effective life insurance plans. Some of the same are listed below: 

1. Life Cover and Financial Security
   The main advantage of any life insurance plan is the financial security or protection it provides to the beneficiaries or the insured’s family at the time of his untimely demise. However, it is advisable that the coverage should keep increasing depending on where you are in your life. For example, it is preferable to have a higher cover post a child comes along.
   Since, term insurance is for a fixed period; selecting the right term can often be a confusing task. As a thumb rule, the best term insurance plans are those which are dependent on your retirement age and health. If you are 30 years old and are likely to retire at 60 years, you should ideally opt for term insurance with a 30-year tenure.
2. Lower Premiums
   A significant reason why term insurance is profitable is the benefits of lower premiums. The premium payable under a term plan is more economical as compared to other plans because there is no investment element attached to it. Studies have shown that an individual of 30 years can get a sum assured for Rs.1 crore by paying just Rs.8,500/- annually for a term of 30 years!
3. Flexibility
   Term insurance plans offer you immense flexibility. You can opt for an online or offline plan, and many insurance providers do not even insist on a health check-up till a particular coverage! Though, it’s difficult to make changes to the plan during the term; you can easily opt for a new plan when the need arises. Further, you can customize the best term insurance for you by adding on further riders and covers
4. Low Brokerage Costs
   When you opt for a life insurance policy, you are liable to pay brokerage costs which usually form part of your premium. This could be as high as even 30-40% of your first premium payout and decreases thereafter. However, under a term insurance policy; these costs are usually in the range of just 5-6%, which is relatively lower. This is why term insurance is often the best choice for people looking for affordable life insurance. Further, if you purchase the term plan online; the brokerage costs would be NIL.
5. Numerous Riders
   There is usually a basic life coverage attached to the term insurance. However, if one wishes to add on extra protection or coverage, they can do so by opting for riders at nominal costs. These riders include accidental death, disabilities, critical illnesses, and more. 

Life Insurance is a critical part of a holistic financial plan. However, not all can afford the high premium costs of some life insurance plans. Term Insurance offers a high value of death benefit at extremely affordable premium prices. Factoring all the reasons mentioned above, buying term insurance is highly profitable than other investments!