Just as life can be surprising, which makes it difficult for us to think of the events that might happen, planning for the unusual is a smart move. A very simple yet effective way you could ensure your family has financial coverage in times of difficulty is through a term life insurance policy.
As opposed to other types of life insurance, term plans are a kind of insurance plan that protects for a certain time and pays a death benefit if the insured person dies within that time.
In this article, we will look at the benefits of term life insurance in India and highlight a few factors to consider that will help you in your financial decision-making process.
Top Advantages of Buying Term Life Insurance
Term life insurance is fundamentally the ultimate tool to protect your family against financial loss in case of your unexpected death. If you are single or the main earner of the family, your unforeseen absence could lead to considerable financial difficulty for your dear ones.
Affordable Protection:
Term life insurance is comparatively less expensive than other kinds of life insurance. It covers just a certain number of years and does not have any savings or investment element. That is why it has lower premium rates more often.
This aspect of it makes it applicable to families with young kids, newly built house owners, and individuals who require protection without committing a larger portion of their income.
Sizeable Sum Assured:
You can choose a sizable sum assured at a relatively cheap price with term life insurance in India. This makes it possible for your family to pay for things like housing expenses, school fees, and unpaid debts, even if you are not around.
Tax-Free Payout:
Under Section 80C of the Income Tax Act of 1961, term insurance premiums can be deducted from taxes up to ₹1.5 lakh each fiscal year. It is also a tax-efficient financial strategy because nominees' death benefits are tax-free under Section 10(10D).
Customisable Add-Ons:
Many Indian insurers offer riders or add-ons, including critical sickness cover, accidental death benefits, waivers of premiums, and disability insurance. These can be incorporated into the policy for increased protection, depending on your needs.
Peace of Mind:
The fact of the matter is that it mainly assures you of peace of mind, and even in the worst case, your family will have financial help to cover the bills, debts, and living expenses without you around.
Note: Check the most recent premium rates, features, and eligibility criteria directly with the insurers or licensed advisors, as the terms and availability would change from year to year.
Factors to Consider
Though term life insurance provides many benefits, making a decision to buy the policy requires you to take note of some particular limitations and factors beforehand:
Maturity Benefit Not Available:
If you happen to surpass the insurance coverage time, you will not receive any reimbursement at all unless you have chosen a return of premium plan, which is generally more costly.
Increased Premium Because of Age:
The later you buy a term insurance policy, the higher the premium you will have to pay. This is mostly true after the age of 35 and if you have health issues.
Medical Checks and Disclosures:
Many policies expect people to take medical tests, and there is a need for proper health disclosures. For example, if you hide some of your medical history or lifestyle habits (e.g., smoking), your insurance claim can be rejected.
Policy Terms and Conditions:
It is always suggested to read the policy carefully before finalising the contract. You should know what is excluded, the procedures to make claims, waiting periods (in the case of critical illness riders), and payout options.
Choosing the Right Cover:
Choosing an insurance cover that fulfils all your family’s real needs, especially when you factor in inflation, outstanding loans, education costs, and future financial goals.
Note: Check the most recent premium rates, features, and eligibility criteria directly with the insurers or licensed advisors, as the terms and availability would change from year to year.
Conclusion
For the financial planning process in India, the most important is Term life insurance. It is an affordable option with its low premium, however, still providing you with a higher sum assured.
You can design it according to your needs, so you are assured of its reliability concerning the future of your loved ones. Indeed, it may not yield huge returns, but the peace of mind it offers you and the financial protection it brings are worth it.
Nevertheless, it is of utmost importance to select the appropriate policy after conducting a careful study to consider the long-term necessities of your family. Before signing up for the policy, get fully prepared and understand the policy conditions better.
