Advantages and Disadvantages of Term Life Insurance Plan – A Complete Guide

Advantages and Disadvantages of Term Life Insurance Plan

A term insurance plan is a pure protection plan that secures the financial future of your family when you are not around. It comes in handy with an affordable and pocket-friendly premium amount that you cannot go wrong with. But when it comes to the overall benefit we often feel overburdened by the pros and cons of a term life insurance plan. 

In this article, we’ll see how you can enjoy the advantage of a term insurance plan and how it can be affordable for you at the same time.

What is a Term Insurance Plan?

Term life insurance plans are one of a product kind in the insurance sector that provides full-time coverage to your family members and loved ones even when you are no more in this world. It protects them from getting hacked into any kind of financial discrepancies. Moreover,  the amount of sum assured and the coverage benefits of the term life insurance policy may differ from plan to plan or from company to company. 

But how does it work? When the policyholder of a term life insurance dies or meets with an unfortunate death without completing his/her policy tenure, the nominees or the family members or the beneficiaries of the policyholder get a death benefit which is equal to the sum assured of his/her policy. But if the policyholder outlives the policy term, he/she will get a lump sum amount as their policy benefits out of how much premium amount they’ve paid to date.

What are the Benefits of Term Life Insurance?

There is multiple advantage of term insurance, some of the benefits of term insurance are listed below:-

  1. Cost-effectiveness:- The feature of cost-effectiveness with a term life plan is what it makes worthy of all the hype. A policyholder is entitled to get a large coverage amount at just affordable price, making it a safer investment option for all. 
  2. Broader Sum Assured:- A wider sum assured amount can be beneficial for the future financial needs of your family, as only at a lower premium rate, you enjoy a coverage of 1-2 crore rupees easily.
  3. Additional Rider Benefits:- Adding multiple riders such as critical illness riders, accidental death or accidental disability riders, hospitalization, waiver of premiums, and terminal illness riders, with your base term plan could be highly beneficial.
  4. Flexibility:- A term plan may come with the flexibility of higher conversion of plan type. You have the freedom to choose when and how much amount you want to pay to the insurer. Also, the renewability and convertibility of the plan are too easy. 
  5. Ease of buying and renewal:- According to your suitability, you can opt for a plan that suits your needs the best. You can also choose an affordable plan online that suits your requirements best.
  6. Tax Benefits:- With a term plan, a policyholder can also avail of tax exemption under sections 80C, 80D, and 10(10D) of the Income Tax Act of 1961.


What are the Disadvantages of Term Life Insurance?

Even if there are multiple advantages of term insurance plans, it has their shortcomings too, let’s have a look over the disadvantages of term life plans:-

  1. Those who are planning to have higher education that involves huge amounts, marriages generally happening at specific destinations, retirement plans with higher income returns, and debts of huge amounts can not get much benefits from their term life insurance plans
  2. You don’t need to get wider coverage against high inflation. Also one can not think of acquiring wealth out of their term plans as it has only a limited benefit as coverage amount.
  3. Sometimes, having an edge of return from all the premiums that you’ve paid is amazing, but no way you’re gonna get a return over premiums if you survive your policy.


You may have several benefits of term insurance if resonates with proper riders and adequate sum assured. It can ideally fill all the requirement criteria you or your family members may have with providing financial protection. If incorporated with a suitable plan, at a young age, you can enjoy freedom or peace of mind. If you’re planning to buy a term life insurance plan right now, get quotes from our expert advisors at and get the potential benefits of term life insurance.

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