In this article, we will discuss what a basic life insurance plan is.
Basic Life Insurance Plan
What is Term Insurance?
Term Insurance is the purest or the most basic type of Life Insurance Plan. In Term Insurance, the family will either get a life cover or sum assured in the event of the policyholder's unexpected death during the policy tenure. If the policyholder survives the policy term, no maturity benefit is payable.
However, in the Indian context, Basic Life Insurance Plan refers to Term Insurance Plans.
Features and Benefits of Term Insurance Plans
- Offers pure life cover – If you are the only earning member in the family, your demise can lead to a financial crisis in the family. They may not be able to manage the expenses. In order to secure your family's financial requirements, a life cover as a lump sum amount will be paid to the nominee. However, there is no maturity benefit under Term Insurance.
- Choice of riders – You can extend your Term Insurance benefits by customizing the plan with additional riders like critical illness, disability, accidental death etc. In this case of critical illness or disability, there will be a financially tough situation that the family cannot manage. You can increase the coverage and get paid for the treatment in this case.
- Tax benefit – Premiums paid under Term Insurances qualify for tax deduction according to Section 80C of the Income Tax Act, 1961. The death benefit paid out to the family is tax-exempt under Section 10(10D) of the Act.
- Affordable premium rates – You can purchase Term Insurance at cheaper premium rates when you are young. At a younger age, the extent of you getting prone to diseases are less likely, and you may not have pre-existing ailments. So, the premium will be fixed at a lower rate. You can increase the coverage at different stages in your life, like when you get married and become a parent.
- Pay-Outs – You can choose from flexible payout options so that your loved ones get the sum assured at different stages in life.
- Joint Benefit – There are provisions to include your spouse's life cover as a Joint Term Insurance Plan.
People with no sufficient investments planned for the family, having many debts like home loans, and have huge financial commitments like children's education will have to take the Term Insurance considering the responsibilities they hold.
However, buying such a plan requires you to analyze your financial stability. You have to know your present financial status and the expenses that are bound to occur regularly; going further, you should strategically plan your financial goals.
Based on this understanding, you can make out the best life insurance online to suffice your necessity. Know your financial duties, secure your family and plan your monetary advantages well to lead a peaceful life ahead.
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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