What are the Survival Benefits in Term Insurance?

Term Insurance

Term Insurance

Nidhi’s father had been investing for a term insurance plan that was guaranteed to financially protect her and her mother, in the event of his passing away. However, as his term policy maturity date neared, he was left wondering what would happen to the premiums he had paid over the years since its benefit had not been realised. That is when he along with his family learnt about survival benefits that are available with certain term insurance plans, but was unfortunately not offered with the plan he opted for.

A term insurance refers to an insurance policy that pays a lump sum amount to the dependents of the policyholder, in case of the policyholder’s death. Survival benefit in term insurance refers to the amount paid out to the policyholder if they outlive the policy’s term. It is a lump sum amount available to policyholders at the maturity date of their term insurance. It may include the accrued bonuses, returns on investment and the total sum assured.

In recent times, the survival benefit has become a more common occurrence in the Indian insurance sector with increasing demand from consumers. Previously, term insurance policies did not generally provide survival benefit and just acted as a “pure” insurance instrument wherein the policyholder’s dependents were provided with a lump sum amount upon the policyholder’s death. Now, with the survival benefit in term insurance plans becoming more commonplace, there are several advantages that policyholders can attain easily. Read on to learn about these.

  1. Death Benefit:

    Death benefit continues to be the most compelling factor behind people opting for term life insurance policies. Death benefit is the lump sum amount that is paid out to dependents upon death of the policyholder. The death benefit amount is intimated to the policyholder at the time of their signing up for the policy itself.

  2. Tax Benefits:

    There are several tax benefits associated with opting for a term life insurance policy. Paying premiums on a term life insurance policy allows a policyholder to claim deductions under Section 80C of the Income Tax Act, 1961. Additionally, the lump sum amount available at the time of maturity of the term policy is also subject to tax exemptions. Thus, the death benefit or survival benefit in term insurance policies allows policyholders to claim tax exemptions under Section 10(10D) of the Income Tax Act, 1961.

  3. Maturity Benefits:

    Previously, term insurance life policies did not offer any compensation for policyholders who survived the term insurance policy term. However, in recent times, insurers have begun offering survival benefit, which provides the policyholder an opportunity to avail a lump sum amount in case they outlive the policy term period.

  4. Add-ons and Riders:

    These term insurance policies also offer additional riders along with the term life insurance policies. These add-ons or riders could include critical illness cover or accidental cover. Such riders allow policyholders to claim coverage in case they contract critical illnesses or suffer accidents, depending on the rider chosen by the policyholder.

  5. Income Benefit:

    Another feature that many insurers are now providing to policyholders include an income benefit with a term life insurance plan. This income benefit is useful for dependents of the policyholder, after their death. With an income benefit, dependents receive a certain fixed income over a period of several months after the policyholder’s death in the form of an income, from the insurer.

Opting for the survival benefit in term insurance plans is allowing policyholders to reclaim their premium payments, in the event of them surviving their policy tenure. Term insurance offers a range of other benefits, that allow policyholders and their dependents live a comfortable life regardless of circumstances and unexpected eventualities. It is important to select a term life insurance policy with care and ensure that the best one is opted for. With term life insurance policies now available online, it is easier than ever to complete documentation and payments online and maintain transparency in the entire process.

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