A term insurance plan is an affordable way to guarantee financial protection to your loved ones in case of your demise. Check out this post to know some of the top benefits of term insurance and how it can play an integral part in your financial planning.
Life is uncertain and full of unexpected events. The only thing that we can do is to take measures to help reduce the impact of such unfortunate events. Purchasing insurance like term insurance is one of the best ways to make sure that at least the finances of your family could be taken care of in case of your unexpected demise.
From your child’s education, maintaining their lifestyle, achieving financial goals, to paying off your debt, the proceeds from the insurance could be used by your loved ones in many different ways. To understand term plans better, it is essential to know their benefits first.
Here is a list of top 5 reasons that make term insurance a must for every solid financial plan:
- Lower Premiums with High Life Coverage
Some advisors and experts recommended that your life insurance coverage should at least be ten times of your annual income. So, if your annual income is Rs. 10 lakhs, your insurance coverage should at least be Rs. 1 crore. Getting a life cover of Rs. 1 crore with other types of life insurance products could be significantly more expensive than term insurance.
Even though term plans are available for a limited duration of 10-30 years, you can easily renew the policy and stay covered throughout your lifetime.
- Easier to Understand
There are now life insurance plans like endowment plans which combine insurance with savings. Then there are ULIP plans which come with life cover and investment component. While such plans have their benefits too, they are generally more difficult to understand for someone new to life insurance.
Term plans are simple, and even a layperson could easily understand them in detail. All you need to do is select a policy, pay its premium, and your life would be covered as per the term and coverage amount selected.
- Additional Riders
To further enhance the scope of term plans, some of the insurance providers also offer a number of add-ons or riders. Some of the top riders you can consider are – accidental death, waiver of premiums, critical illness, and income benefit.
These riders add more features to the policy and offer more protection to you and your family. The riders slightly increase the policy premium but are highly recommended for better financial planning and added protection.
- Tax Benefit
As term insurance is a life insurance product, the premiums you pay and the payouts received by your nominee are eligible for tax benefits. Under Section 80C of the IT Act, insurance premiums of up to Rs. 1.5 lakhs can be deducted from your taxable income in a financial year.
Moreover, the payout on the death of the policyholder is fully exempt from any tax implications under Section 10 (10D).
- Multiple Death Benefit Options
Some of the term insurance policy providers also offer multiple death benefit options. For instance, your nominee could receive the death benefit as a lump sum payment or as a monthly payment for a fixed number of years.
Some of the policies also have increasing monthly payment option to meet the growing financial needs of your family better.
Buying Term Insurance
If you are looking for life insurance, term insurance is definitely one of the options you could consider. But to experience the benefits mentioned above in the best way possible, make sure that you select a reputed insurance provider.
The company should have an excellent reputation among customers with affordable premiums and an impressive claim settlement and solvency ratio. Also, check the features of the policy, including the inclusions and exclusions, to avoid
