Term insurance is a financial protection plan for human life events, such as untimely death, injury, accident, and retirement. Natural and unnatural causes of death and disability pose a threat to human health. When human life is lost, or an individual is permanently or temporarily disabled, the household loses income.
Term insurance policies pay out a set amount of money if the life insured dies or becomes injured due to an accident within the policy’s duration. Although it is impossible to put a price on human life, it may calculate a monetary amount based on potential income losses. As a result, the sum assured (or the amount promised to be paid in the case of a loss) is a benefit of term insurance.
Here are some reasons why finding the best term plan for your family will be one of the best financial decisions you make:
1. It Is Affordable
Since there is no investment component or a maturity benefit involved, the term plan premium is lower than all other insurance policies. Hence, it is also called a pure protection plan. You can get long-term coverage at minimal rates.
For instance, if a 30-year-old individual like Mr. Patel wants coverage till he turns 60, he can get a sum assured of Rs. 1 crore at a premium of Rs. 740 per month, according to online term insurance premium calculators. He can remain financially covered against unforeseeable circumstances for the next thirty years of his life at such minimal rates.
2. Provides Financial Stability
Understanding what is term plan is crucial to begin planning for your family’s future. Pure term insurance plans are a way to financially protect the lives of your loved ones and help them fulfill their lifestyle needs in the event of your untimely demise.
Losing an earning member of a family can throw the lives of other family members into disarray. Managing regular expenses and providing for the family’s basic needs becomes exceedingly difficult in this situation. Term insurance pays the sum assured as death benefits the insured individual’s death, making life easier for the surviving family members.
It is crucial to make sure the insurance coverage is updated to keep up with changing needs as the year’s pass. Since the lifestyle standards and the expenses may keep growing steadily, you may want to opt for a more significant sum assured, which is offered as a feature by some insurance providers.
3. Ability to Customize
Along with coverage for untimely demise, most term insurance policies offer riders that include extra benefits to the insured. You can add riders with an accidental death and disability benefit, critical illness coverage, and a waiver of premium for a small additional premium. Adding such riders will allow you to get the best term plan without putting a burden on your financial situation.
4.Take Care of Liabilities
In today’s time, almost every one of us has a loan of some kind or another. It may be a car loan, a home loan, or a student loan. When you find the best term plan to safeguard your family’s financial health, you must keep such liabilities in mind. It is vital to choose a sum assured that can support your loved ones if an unfortunate event may cause additional strain on them due to outstanding loan repayments.
5. Secure Life Goals
The breadwinner of every family has responsibilities to fulfill towards his or her dependents. An untimely death can ultimately prevent you from fulfilling those responsibilities. With a term insurance plan, you can start saving for any such financial emergencies of the future.
In case of an unfortunate event, the insurance company’s payout will guarantee that your dependents are financially independent. Your children can receive a decent education and fulfill their life goals without worrying about a lack of funds. Similarly, your parents and spouse can live comfortably without relying on anyone else.
6. Build a Sound Financial Plan
When you have the best term plan aligned with the specific financial needs of your family, your financial plan has a strong foundation. It allows you to instill a disciplined savings habit in your life without causing a noticeable strain on your income. Furthermore, you can also strategize your investments more efficiently since you have a clearer idea of your expenses and priorities.
7. Prepares You for the Bigger Picture
You will be grateful you had the foresight to secure yourself with high coverage at a young age when you have accomplished your hopes and aspirations later in life. That is why term insurance is essential for building a solid financial base for the rest of your life.
8. Tax-Free Death Benefit
The death benefit offered by the term insurance plan is tax-free under the Income Tax law of India. Moreover, you are also entitled to tax benefits for the premiums paid to keep the term insurance active. Under Section 80 C of the Income Tax Act, you can avail of a tax benefit of up to Rs. 1.5 lakh each year for the premiums paid.