Term insurance is a form of life insurance that provides a substantial amount of life coverage to the policyholder for a certain period of time at an affordable premium. The death benefit will be received by the nominee in the event of the policyholder’s unfortunate death. The sum assured will either be paid in a one-time lump sum or regular payments on a monthly basis as was chosen by the policyholder at the time of opting for the policy.
Term insurance ensures the security of the family in the event of the policyholder’s unexpected demise. The sum assured will help the policyholder lead a life in a respectful way and handle financial liabilities.
Before proceeding ahead in the article and learning more about Term Insurance, let us first know how this term insurance helps to secure your family’s future.
Income Replacement
It acts as a replacement for the income that you used to provide for your family. Its primary aim is to provide income support in case your death occurs during the policy tenure. The nominee, in this case, will receive the tax-free sum assured, providing financial support to cover all the important expenses in your absence.
Health Crisis Management
In case a covered illness is diagnosed, one can take benefit of critical and terminal illness rider benefits to get financial assistance.
Debt Settlement
It helps to settle outstanding debts or loans, avoiding financial liabilities for families. This ensures the maintenance of lifestyle and assets without any risk of losing them to debt repayment.
Education and Future Goals
Funds that are raised can be used to fund the children’s education or some other long-term financial goals, such as purchasing a new house or starting a business. It helps the family fulfil their dreams even in your absence.
Maintaining Lifestyle
It helps you maintain your lifestyle without any interference, which includes expenses like utility bills, shopping, rent, maintenance, property tax, investments, etc.
Emergency Fund
It acts as an emergency fund which offers financial support to manage unexpected expenses, medical bills, etc., that may arise due to unforeseen circumstances.
Tax Benefits
The amount payable towards the death benefit of term insurance is exempt from the tax under section 10 (10D) of the Income Tax Act. Hence, your family can take advantage of a significant payout without thinking of the tax liabilities.
Peace of Mind
When you know your family is protected financially, you can focus on other responsibilities and enjoy life without thinking of what will happen when you are not present.
Who Should Buy Term Insurance?
Mentioned are the categories of people who should buy a Term Insurance Plan:
Young Earners
Youngster should consider getting term insurance, as it will provide safety and guarantee the family’s financial security when they are not present.
Newlyweds and Young Parents
Newlyweds and couples entering into parenthood should also opt for Term insurance. Acting as a financial support system, it safeguards the future of the parents and children.
Sole Breadwinners
Individuals who are sole breadwinners should also consider term insurance, as this will help their near and dear ones in case of their sudden death.
Homeowners with Loans
Individuals with home loans can also consider term insurance, which will not overburden the family if the insured dies.
Young Debtors
Individuals with huge debt should also consider term insurance, as it can help prevent the passing of debt responsibilities to their families.
Entrepreneurs and Business Owners
Entrepreneurs can use term insurance strategically to ensure their business continues and further support their family financially in the event of sudden demise.
Other Self-Employed Individuals
Term insurance can be protected against loss of income that would occur in case of the sudden demise of a self-employed individual by opting for term insurance.
Investors
In the event of an investor’s sudden demise, the regular amount invested for wealth generation would be paused. Term insurance would prevent this by securing the future of the family members of the investor.
Indviduals with Dependent Elderly Parents
Term insurance provides financial security for the parents of individuals in case of their sudden demise.
Retirement Planning
To ease out the retirement transition, one should opt for term insurance. It provides coverage till the time their dependents gain financial independence.
Senior Citizens
Senior citizens can also look for term insurance to secure their spouses.
Housewives
In the event of the sudden demise of housewives, term insurance covers the replacement costs of the services.
Women
Term insurance for women ensures their families and hence provides financial stability.
Taxpayers
It helps reduce the overall tax liability, and the premiums payable are tax deductible under section 80C of the Income Tax Act.
When is the Right Time to Buy Term Insurance?
Mentioned are some of the advantages of buying a term insurance at the right time:
Lower Premiums
Adults enjoy affordable premiums more.
Long-Term Savings
Early investments lead to significant cost savings over a period of time.
Financial Security
It provides financial security and enhanced coverage from a young age.
Health Benefits
Cover the lock-in period, which will lead to the risk of development as health issues increase.
Peace of Mind
Term insurance ensures the financial security of their loved ones in case of unexpected or unfortunate death.
How to Buy the Right Insurance Policy?
Calculate the Right Sum Assured and Tenure
Make an assessment of your current financial status, financial requirements required, and the needs of your dependents. Take into consideration any loans, liabilities, and significant expenses, if any. Look for the amount of sum assured and term insurance policy tenure, and then select a plan that provides that you admire.
Finalise the Features and Inclusions
Check the list of what is included, excluded, features, riders, and add-ons. Make a list of all your requirements from a term plan, like critical illness coverage, premium payment flexibility, return of premium benefit, specific riders, etc.
Compare Plans
Based on your specific requirements, research, compare, and finalise the term insurance options. With the help of an online term insurance calculator, select a plan within your budget which will offer the desired insurance coverage. The factors to be considered are coverage amount, Claim Settlement Ratio, policy tenure, amount, riders, etc.
Apply and Pay the Premium
Finally, complete the online insurance application for the plan as selected by providing the necessary details and information, uploading all the required documents, and reviewing the policy terms before paying the premium online.
Conclusion
Term plans help secure the future of the policyholder’s family through the payment of death benefits in the event of their unforeseen demise. They guard dependents such as the policyholder’s spouse, children or elderly parents from having to take on the financial burdens of the deceased in such situations.