Term insurance is a type of insurance that provides life coverage upto sum assured for specified period of time. Term Insurance is a pure protection policy. It doesn't have any savings/investment component attached to it.
Advantage of Term Insurance is the Level Premium. Insured will pay the same premium from inception of policy to the end of policy. There will not be any increase in the premium with increase of age. So It's advised to take Term Insurance early. Insured person can avail huge sum assured for very less premium.
Insurer will give entire sum assured to the nominee in case of any unfortunate event(Death of insured) occurs within the term of the policy. And there will not be any Survival/ Terminal benefits at the end of policy term.
As per thumb rule of Term Insurance, It is recommended to cover life of insured upto 15 times of the yearly salary/earning capacity.
Example: Salaried Person with Rs 5 Lakhs salary per annum should have at least the coverage of 75 Lakhs. Term Insurance of Rs 75 Lakhs Coverage can be availed with premium of less than Rs 15000/-
Term Insurance helps to cover your outstanding liabilities, future goals and provides financial assistance to dependents in case of your absence.
MentoTax recommends you to avail Term Insurance Policy as soon as you start earning and suggest you to cover equivalent to the human life value of a insured.
Premium paid for the Term Insurance Policy can be exempted under 80C of Income Tax Act.
For More Clarifications
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