When you think of financial planning, an insurance plan may not be the first thing you think about. Like most Indian families, you may not have considered the importance of having a financial cover for emergencies. However, given the rising cases of critical illnesses, accidental deaths and a general increase in vulnerability to threats in the environment, the need for term insurance is no longer avoidable.
Anyone who is responsible for the well-being of another family member should consider including term insurance in their financial plan. When your life is covered with a suitable term insurance plan, it gives you the assurance that your loved ones will lead a comfortable life when you are no longer with them.
Let’s understand some of the benefits of term insurance in detail to know more:
Most people find it troublesome to buy insurance plans because of the complexity and price. Term insurance is a specifically structured product to address this issue, and therefore, it is the most uncomplicated and basic financial tools available today.
It is a pure protection tool that provides a death benefit to the insured individual’s family in case of an unfortunate incident. You can get financial security at minimal premium rates, which are not heavy on your pocket.
Notably, it is in your best interest to buy term insurance at an earlier stage in life to enjoy coverage at even lower rates. Since younger people are not medically at risk, insurance companies provide coverage at lower rates, as compared to an older individual who might have health problems.
If you are an earning member of the family, you may have dependents such as a spouse, children or parents. Since their financial well-being depends on you, it is vital to think of them when you are creating a financial plan. Investing in a term insurance plan will allow you to establish a financial shield of protection around your loved ones, covering your life for an extended period.
Essentially, term insurance is a long-term financial instrument. There are insurance providers who also offer whole life coverage with a term insurance plan. Therefore, you can remain covered under a term insurance plan at minimal rates for a long time and keep your family protected against financial hardships.
Term insurance allows you to get comprehensive coverage for your family, including an aspect of health insurance. Your insurer may offer certain riders as add-ons to your term insurance, which can enhance the coverage significantly. For instance, most insurance providers offer a critical illness rider with their term insurance plan. Such a rider provides you support for medical bills incurred in case you suffer from a life-threatening illness.
The specifics of the coverage may vary from insurer to insurer. Therefore, make sure to check the policy document and understand what is term insurance exclusions and inclusions when you attach a rider to your policy.
Flexible Premium Payment Modes
You can select to pay the premium for the whole duration of the term insurance coverage till a certain age or time within the policy term. It depends on the insurer to offer the flexibility in premium payment modes. However, almost all insurers allow the policyholder to choose the premium payment frequency. You can select to pay the premiums for your policy monthly, quarterly, half-yearly, or annually.
If you have any outstanding liabilities such as a home loan, car loan, education loan for a child for which you are paying EMIs, make sure to consider them at the time of buying term insurance. In case of your untimely demise, your family will be left with the burden of loan repayment, which can quickly turn into a financial nightmare.
So, make sure to choose a suitable term insurance plan which will provide them with sufficient funds to pay off the debt and live a comfortable life.
Some insurance providers like Max Life Insurance also offer increasing term insurance cover. This means that the policyholder has the option to increase the sum assured at certain life stages to accommodate the impact of inflation and keep the cover amount relevant to their current lifestyle needs.
Since the living standards are evolving rapidly, this can be a valuable feature of a term insurance plan as it keeps your family’s financial cover up-to-date. Check for the availability of such a cover with your insurer to make sure you choose the right term insurance plan.
Income Tax Benefits
As a taxpayer, you are entitled to some tax benefits when you buy term insurance. Each year, you can claim a tax benefit for the premiums paid for the insurance plan, up to Rs 1.5 lakhs under Section 80C of the Income Tax Act, 1961. In case of your untimely demise, the death benefit received by your nominee will be tax exempted under Section 10 (10D) of the IT Act.