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Features of Term Insurance you may not be aware of

by Tom
Features of Term Insurance you may not be aware of

Features of Term Insurance you may not be aware of. When it comes to securing your future and that of your loved ones, term insurance is often a preferred choice. But are you aware of all the features that come with it? Sure, most of us know the basics — like the death benefit and tax advantages— but term insurance has a lot more to offer. Let’s dive into some vital aspects of term insurance that could potentially redefine your perspective on it.

Flexible-Premium Payment Options

Most term insurance plans offer the flexibility to choose how you want to pay your premiums. You’re not stuck with just an annual lump sum; you can opt for semi-annual, quarterly, or even monthly premium payments.

Single-Premium Plans

Some term insurance policies even allow a single-premium payment, where you pay the total premium upfront. This feature is perfect for those who don’t want to worry about missing future payments.

Riders to Enhance Your Coverage

There are certain riders available that you can add on to your basic term insurance plan. Here are the some riders you can add:

1. Accidental Death and Disability Riders

Accidents are unpredictable and can happen to anyone at any time. While a term insurance policy offers financial protection in the event of your untimely death, adding an accidental death and disability rider is advisable. With this rider in place, your beneficiaries will receive an extra payout over and above the standard death benefit if you were to die in an accident.

2. Critical Illness Rider

The rise in lifestyle-related diseases makes the critical illness rider more relevant than ever. Imagine being diagnosed with a severe illness like cancer, heart disease, or stroke. The financial burden could be immense, especially considering the high costs of specialised medical treatments and long-term care. A critical illness rider can alleviate this burden significantly.

Convertibility Feature

Did you know you have the option to convert your term insurance plan into a permanent life insurance policy? This feature is available with some plans. You will have to check with your insurance company. The convertibility feature provides you the flexibility to switch to a policy that better suits your life circumstances. Whether you want to switch to a whole-life policy or a universal life insurance plan, the convertibility feature makes it easy. This flexibility is especially useful for those who anticipate significant life changes, like starting a family or purchasing a home.

Return of Premium Option

Contrary to popular belief, not all term insurance policies are ‘use it or lose it’. Some plans offer a ‘Return of Premium’ option. If you outlive the policy term, the premiums you’ve paid for the policy are returned to you. It’s like a savings plan along with a life insurance. This feature can be particularly appealing for young adults who are starting to think about long-term financial planning.

Portability of the Policy

In today’s global world, you might need to relocate for work or personal reasons. That shouldn’t mean losing the coverage you’ve been paying for. Some term insurance plans are portable. This means your policy is valid even if you move to a different state or country. This portability feature can be invaluable for frequent travellers or those contemplating international relocation. Make sure you check the terms and conditions or consult your insurance advisor to understand how portability works in your policy.

Term Insurance Calculator

When planning for life insurance, you’ll encounter a plethora of options, riders, and clauses. It can be overwhelming. This is where a term insurance calculator comes in handy. You can use this calculator to estimate different scenarios, compare premium costs, and even simulate how specific life changes could affect your policy. A term insurance calculator can help you choose the best coverage and premium plan tailored to your individual needs and circumstances.

Tax Benefits

One of the most attractive but often overlooked features of term insurance is the tax benefits it offers. Here are the tax benefits that you can claim if you have a term insurance plan: 

1. Section 80C: Tax Deduction on Premiums Paid

You probably know that the premiums paid for your term insurance are tax-deductible. But to what extent? Under Section 80C of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakh per annum on your taxable income. This means that not only are you securing your family’s future, but you’re also reducing your current tax liability. It’s a win-win situation.

2. Section 10(10D): Tax-Free Death Benefit

Most people purchase term insurance to ensure that their loved ones will be financially secure in their absence. That’s not all. According to Section 10(10D) of the Income Tax Act, the death benefit amount received by the nominee is entirely tax-free. This ensures that your family gets the full amount, without any deductions, making term insurance not just a protective but also a tax-efficient instrument.


Term insurance is not just a protection plan. From flexible premium payments to additional riders and tax benefits, there are numerous other benefits. Before you make a decision, use a term insurance calculator to weigh your options carefully. Remember, knowing about the features of your term insurance plan will help you make the best choice, safeguarding your future.

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