Term insurance plan is a form of life cover, which provides coverage for a defined period of time, and if the insured expires during the term of the policy then death benefit is payable to the nominee. Term plans are specifically designed to secure family needs in case of death or uncertainty. It provides a specific amount of coverage for a specific period of time.The premiums for Term insurance policies are the lowest among all the types of life insurance policies. The premiums are low since there is no investment component and the entire premium goes for covering the risk. So if the policyholder expires during the insured term, the death benefit is paid to the nominee. There is no survival or maturity benefit once the policy term expires. There may be some plans that offer to return the premiums paid by the policyholder if he survives.Premiums paid for all life insurance policies are exempted from tax up to a maximum of Rs 1 lakh under Section 80C of the Income Tax Act, 1961. The claim amount received by the beneficiaries or bonus in the hands of the policyholder is tax-free under Section 10 (10D) of the Income Tax Act.
