Term insurance is one of the most popular types of life insurance. It is a pure protection plan which means that it only provides a death benefit. In case the policyholder passes away during the policy period, their nominees will receive the sum assured. A 10-year term life insurance means a term insurance with a policy period of 10 years.
10-year term insurance benefits
When you take a term insurance policy for 10 years, there are several benefits that you can enjoy. Some of these include:
- Lower premiums: Since this policy only offers death benefits and not maturity or survival benefits, the premium is comparatively lower. A 10-year policy will have a lower premium as compared to a policy of 20 or 30 years. Another benefit is that the premium stays the same throughout the 10-year period.
- Financial security: One of the primary term insurance benefits is that it offers financial security to your family. When you have certain loans that you are paying for, opting for a term insurance policy can be a strategic move. For instance, if you have a home loan that has 10 years of EMI payments left, taking a 10-year policy as a safety net for it could be helpful. This is because in case the worst happens to you, the debt burden won’t fall on your family and the loan can be paid off easily with the insurance money.
- Goal planning: In a similar way, you can buy a 10-year policy to secure long-term financial goals. For instance, if your children’s higher education is 10 years away, you can buy a term insurance policy to ensure that the insurance funds can be used to finance their education even if you are not around. This way, by buying a 10-year insurance3 policy you can safeguard important financial goals against the uncertain nature of life.
- Tax benefits: You can enjoy term insurance tax benefits under section 80C and section 10(10)D of the Income Tax Act, 1961. Under section 80C you can claim tax deductions on the premium paid towards your 10-year insurance policy and under section 10(10)D, the sum assured received as the death benefit is tax-exempt. Hence, the term insurance tax benefits can also help in tax savings.
How to select the best 10-year term insurance policy for you
When buying a 10-year term insurance policy, keep in mind the following points:
- Determine the policy amount based on your annual income, expenses, family’s future goals, debt, etc. It is usually recommended to buy life cover that is at least 10 times your annual income.
- Use a term insurance premium calculator before you make your decision. This is a free, online tool that is helpful in determining how much your policy will cost you.
- When comparing different insurance policies, make sure to look beyond the premium. You should also check out the benefits, inclusions, exclusions, and other terms of each policy to make the right decision.
- Make sure to look at the claim settlement ratio of the insurer. The claim settlement ratio tells you the percentage of claims an insurer settles out of all the claims they receive in a year. This is helpful to understand how reliable and efficient the insurer really is.
- You can buy more than one insurance policy, and this may be helpful depending on your current debt levels and future goals. For instance, a 10-year term insurance policy may be helpful to cover a specific long-term loan while another may be helpful to safeguard a long-term financial goal of your family.
- Look at the list of riders offered by the insurer. Riders allow you to make your insurance policy more comprehensive by expanding its coverage. For instance, you can opt for a critical illness rider or a return of premium rider. It’s important to note that adding a rider would also mean additional premium.
Given the 10-year term insurance benefits, you should look at buying a policy to safeguard your family’s financial future. You can buy a term insurance plan online or offline depending on whatever is convenient for you.
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