Financial planning should be a crucial part of everyone’s life. It is critical to have a blended mix of financial tools to tackle the various requirements of protection, savings, and wealth creation. Term Insurance, being one of the simplest forms of life insurance, is often considered by individuals who would like to focus on wealth creation and leave a corpus for their loved ones. Afterall, it is important to consider the financial security of one’s family under unpredictable circumstances and choose only the best term insurance plan in India.
Image Source: Shutterstock
This is exactly where term insurance comes into play – as it provides financial protection at the most affordable rates. The primary purpose of purchasing an insurance policy is to establish a financial safety net against unforeseen circumstances. Often, people do not prefer buying life insurance as they feel it is complicated. If you are one of them, reading the follow pointers may be helpful to clear the misconceptions.
Benefits of Term Insurance
Finding the best term insurance plan in India gives monetary security to beneficiary family if the policy holder’s death happens. You will also get an optional coverage to all critical illnesses. We have discussed some of the benefits of term insurance you can avail.
- Life cover: The primary benefits the policy provides is life cover. It gives comprehensive security to the policyholder till 99 years of age and even more. It also helps in reducing the monetary burden in case of policy holder’s untimely demise.
- Easy to Understand: When you are purchasing life insurance, you can do your research or contact an insurance agent to understand the terms of the insurance policy, conveniently.
- High Sum Assured: The prime benefit of the policy is its pocket-friendly nature. The plan is undoubtedly available at pocket friendly premiums. The general rule for purchasing a policy is starting early, which makes the premium rates automatically lower.
- Illnesses covered: Someone may need illness coverage at any point of life. The treatment costs incurred could quickly deplete your savings. Though the policy covers life, you can choose for an illness cover also.
- Additional benefits: There are various rider benefits you can add to strengthen your term insurance. Almost every insurance provider offers these additional benefits. But the insurance benefits may change from one company to other.
- Insured Sum Payout: When the policy holder passes away, sum assured will be handed to the family. The family can opt to take the payout as a single payment or as an income on monthly or yearly basis. So, it can help the family in taking care of daily expenses to be manage accordingly.
- Premium Options: The standard term insurance policies do not provide maturity benefits. But you can avail of maturity benefit when you choose to the return premium option, which will require you to pay a higher premium amount. You can use term plan comparison to get an idea about with or without maturity benefits. The total sum of the premium will be returned, excluding the taxes.
- Multiple Payout Option: The family’s breadwinner might be paying several installments for car loans, home loans, and more. So, when the breadwinner passes away, the family faces the burden of these installments. Hence there is an option of multiple payouts that comes with the best term insurance plan in India. Nominee can choose to receive the sum either in bulk or numerous payouts. This helps to give them income every month.
How Much Insurance Cover Do I Need?
The general thumb rule for term insurance cover is eight times the annual income. To calculate more accurately, you can check the term plan calculator. There are many policies which allow you to increase sum assured year by year. You must make sure that the sum assured covers all your family needs.
Income Tax Exemptions
The term insurance policy offers tax exemptions, under two sections of the Income Tax Act.
- Section 80C helps you to access the tax benefit on the premium which is paid to the term insurance.
- The maximum limit eligible cash exemption is Rupee 1.5 L.
- Under section 10D, the maturity amount or the death benefit amount is tax exempted.
Why Choose a Term Insurance Policy?
An insurance plan is the best way to ensure that the family has adequate financial coverage when dealing with uncertainties of life. There is an extensive range of plans available in the market. Using a term plan calculator helps to determine the exact premium you need to pay to the policy. You can choose and purchase a plan that suits your requirements.
