Term insurance is one of the simplest forms of life insurance. It is a pure protection policy that provides financial coverage to your family in the event of your untimely demise during the policy period. Many people in India prefer buying a term plan over other life insurance products mainly because it offers high coverage at an affordable premium.
Another significant term insurance feature that makes it a favourite among insurance buyers in India is its flexibility. The insurance companies in India give you the flexibility to customise the term plan for your specific needs. For example, you can choose the sum assured based on your family’s needs and budget.
Generally, most term insurance plans offer coverage for 5 to 20 years. However, other policies offer long-term protection up to 100 years.
Why should you buy term insurance with 100 years of coverage?
The primary purpose of buying a term insurance policy is to safeguard the financial future of your loved ones against uncertainties. Having term insurance that offers coverage for 100 years, ensures that you and your family members are protected for 100 years.
A significant advantage of buying a term plan with 100 years of coverage is that if your family is at financial risk that stretches beyond your life, the term plan can help take care of the liabilities and debts.
Having a term insurance cover for 100 years helps you get valuable savings in the long run from paying a high premium. Also, you need not undergo any medical tests to get insurance protection. When you buy a term plan at a young age, you can get the cover at a lower premium, and when you choose cover for 100 years, you can lock in the premium for the entire tenure.
A term plan with 100 years of coverage can work as a legacy plan where you can leave behind the sum assured as a legacy for your loved ones.
Another important benefit of having a long-term insurance cover for 100 years or more is that you get tax benefits every year as long as you continue to pay the premium. The premium you pay is eligible for tax deduction up to ₹1.5 lakhs under Section 80C of the IT Act.
The tax benefit is not limited to the premium payment alone. When the insurance company pays the death benefit, the amount is fully tax-exempt in the nominee’s hands under Section 10 (10D) of the Income Tax Act.
How to choose a suitable term insurance coverage tenure?
When you buy a term plan, choosing the right coverage tenure can be tricky. If you pick a plan for a long period, you may end up paying more premium than you should. However, if you choose a term plan for a shorter period, the whole purpose of buying insurance may get defeated.
So, what is the right term insurance coverage term? Should your coverage be till 10, 20, 50, 100 years? The truth is there is no definitive answer.
The only thing you must consider while choosing the best term plan for your family is that the policy period should give your family members enough time to become financially independent.