How often have you heard that you should buy a term insurance plan to secure yourself and your family financially in case of any eventuality? A term insurance plan is a type of life insurance policy that provides coverage for a chosen period of time. Given the current economic situation and increasing cost of living, it is essential to have a term insurance plan that can provide financial security to your family in case something untoward happens. Here are some of the major benefits of investing in a term insurance plan:
Reasons to get a term insurance plan
There are multiple reasons to invest in a term plan. The most obvious ones include:
- Easy to understand:
Term insurance plans are one of the simplest financial instruments available, so they are easy to understand. You can easily understand your coverage needs by researching any additional benefits, such as riders or maturity benefits, and deciding what is best for you.
- High sum assured with affordable premium:
Term insurance plans provide you with high coverage at an affordable premium. The sum assured is determined by the amount of premium paid and your age. Suppose you are a young individual between the ages of 18 – 40. You can get coverage up to Rs. 1 crore with premiums as low as Rs. 500 per month.
- Additional riders to strengthen the policy:
If you want additional protection beyond the basic term insurance plan, you can buy optional riders at a nominal extra cost. These riders provide additional coverage against critical illnesses or death due to an accident. You can customize your term plan according to your requirements and make it even more secure for yourself and your family members.
- Income tax benefits:
Premiums paid towards a term insurance plan are eligible for a tax deduction under Section 80C of the Income Tax Act. This means that you can save on taxes by investing in a term insurance plan. However, before purchasing the policy, it is vital that you review the income tax benefits of the particular insurance plan you are opting for. Also, the maturity or death payouts are tax-free.
- Critical illness coverage:
Some term plans also provide a critical illness rider in the case of specified critical illnesses such as cancer, stroke, diabetes, etc. Under this plan, the insurer pays out the lump sum benefit to you if you are diagnosed with any of these diseases. This can help you get the necessary medical care and treatments without worrying about financial constraints.
- Multiple death benefit payout options:
You can choose to receive the sum assured as a lump sum, or you can opt for an income option where your beneficiaries will get regular payouts over a period of time. This option is quite helpful in case you have accumulated debt or a loan that needs to be paid off in your absence. The dependents on your insurance will get a lump sum, which will help pay off the financial liabilities that you have. It will make it easier for the family members to manage their regular expenses.
- Return of premium option:
You can get the maturity benefit in your term insurance plan and also choose the return of premium option if you want. It will help you pay higher premiums, which will help you survive the policy tenure. The total premium amount that is there will not be included in taxes, rider premiums, or anything else.
Conclusion
Life is uncertain, and things can take a big turn without you knowing anything. But with term insurance, you can plan a better future for your family. Term insurance helps secure your family’s future and pay out your financial liabilities in your absence.