Have you started planning for the financial future of your loved ones? If not, it is advisable to do so at the earliest, as life is uncertain and no one can predict what lies ahead. It is your responsibility to secure the monetary well-being of your family members, and for this, investing in term insurance can prove helpful. If you wish to understand what is term insurance and how it can help you provide for your family even after your untimely absence, read on.
Term insurance is a type of life insurance policy that provides a high sum assured at a fixed premium for a specific duration. In case the policyholder passes away during the term plan’s tenure, the insurer will pay the death benefits to his or her family so that they can lead a financially independent life. While investing in a term plan, it becomes necessary to consider factors like the sum assured, premium, riders, and tenure, as your family’s economic security is dependent on your decision. So, here, you can use a term plan premium calculator to find a suitable policy at a cost-effective rate.
Advantages of term insurance
Here are some plus points of investing in a term plan:
- Affordable premium
One of the main benefits of buying a term plan is that you get it at an economical premium. There is no other life insurance policy that offers such a low premium. You get a term plan at a nominal premium because it does not have any investment component. Moreover, if you purchase at an early age, you can avail of the policy at an attractive price. It is because the risk of mortality is quite less. Also, the premium of your online term policy will be constant throughout the tenure. So, it is recommended to invest when you are young, as you can save a large sum in the long run.
- High sum assured
The life cover offered by term plans is quite substantial compared to other types of insurance policies, considering the premium. Therefore, you can ensure your family’s family stability, as the death benefits can help them take care of all the expenses and long-term financial goals. The sum assured can cover all your financial liabilities, as your family can utilize this money to repay the dues in your absence.
- Tax benefits
You can claim a tax deduction on the premium paid for your term plan under Section 80C of the Income Tax Act, 1961. Here, the maximum permissible amount is INR 1.5 lakh per year. Besides this, the death benefits are tax-free according to Section 10(10D)of the Act.
Term insurance plans offer riders like the accidental death benefit, accidental disability, critical illness, and the waiver of premium, among others. You can select them to widen the scope of your coverage. Though such riders come with a supplementary charge, they offer value for money.
- Low probability of claim rejection
While buying a term plan, ensure that you disclose all the required information accurately. Do not forget to share about your pre-existing health conditions and lifestyle habits, like drinking and smoking with the insurer. The insurer can deny the claim only if they find any ambiguity. Besides this, as per the latest guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI), no insurance company can claim that there are discrepancies in the details or non-disclosure of your medical condition two years after purchase of the policy. So, there are lesser chances of your claim being rejected.
Now when you know why term insurance is a must-buy for everyone, it is time that you invest in the right plan based on your family’s needs and aspirations. Here, you can take the help of a term plan premium calculator to compare the features and costs of various policies and select the ideal plan.