Investing in a term insurance plan is crucial for securing your family’s financial future. It ensures that even in your absence, your family can meet financial obligations, maintain their lifestyle, and achieve life goals. Read on to explore the benefits and other reasons for investing in term insurance and decide when you are going to purchase one.
Why You Should Invest in a Term Insurance Plan?
To understand why you must include a term insurance plan in your financial portfolio, read the reasons stated below carefully:
- Ensure Financial Safety After Your Demise
In your family, if you are the sole earner, especially if you are currently repaying loans or have other financial obligations, your sudden demise can seriously endanger your family’s safety. To ensure that your family stays safe from a financial perspective, you can invest in a term insurance plan.
A term plan is a simple financial tool that can replace income. It can offer you the assurance that even after your untimely death, your family would not have to carry the financial liabilities and can easily pay the loans and cover their daily household expenses.
- Accomplish Life Goals and Aspirations
If you want to make sure that your family, whether it is your spouse, your children, or your parents, fulfill their life goals and aspirations even if you pass away suddenly, you have to take certain measures as soon as possible. Term insurance plans are a feasible option to ensure this.
Whether the sum assured for a term plan will be used primarily for your child’s education or your daughter’s marriage, knowing you can ensure financial security is peace-inducing. With the term insurance payout, your family will be able to maintain their lifestyle and pay for the cost of their aspirations and financial goals, too.
- Life Cover with Affordable Premium
Now that you have realised how massive the potential of a term insurance plan is, you may think that you have to pay a hefty sum for this to work. However, contrary to that assumption, you may feel reassured that you can enjoy financial security without putting any significant dent in your savings account or any other investment. How does spending close to 1% of your annual income sound?
Compared to various other types of life insurance plans, term insurance is much more affordable and thus has become one of the most popular options. Moreover, you get to enjoy lower premiums if you are young and healthy at the time of policy purchase.
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- Large Death Benefit
You understand that having term insurance is an investment on your part. However, you should also understand that investment in term insurance is not affected by the fluctuating economic situation of the market. The death benefit is paid to your beneficiaries in case of your unfortunate demise during the policy term.
- Take Advantage of Add-on Rider Benefits
Add-on rider benefits are designed to help you manage unexpected expenses that may arise during your policy term.
For example, if you get diagnosed with a critical condition during the policy period, a critical illness rider can cover your hospitalisation and treatment costs. This ensures that you will not have to dip into your savings or disrupt your financial plans when facing a medical emergency.
- Save Taxes With Excellent Tax Benefits
As a key part of their financial planning, most salaried individuals seek investment avenues that offer higher returns while also providing tax savings. By maintaining a term policy, you can claim a tax deduction of up to ₹ 1.5 lakh on premium payments under Section 80C.
Your beneficiaries’ death benefit is exempt from tax under Section 10(10D). Moreover, adding riders such as critical illness riders can qualify you for more deductions (under Section 80D of the Income Tax Act), which can further enhance your tax savings.
- Use Customisable Features to Fulfil Unique Needs
Customising your term insurance policy to suit your distinct needs and those of your family is definitely a key feature. With term insurance, you have the flexibility to choose from different coverage types, including level, increasing, or decreasing, based on what fits your situation.
You can also select from various payout options, such as a lump sum, a combination of lump sum and monthly income, or just monthly income. Additionally, you can include coverage for your husband or wife under the same policy.
The Bottom Line
A term insurance plan is an essential part of one’s financial planning. It offers affordable life cover, tax savings, and customisable options. If you choose the right plan, you can protect your family’s future without burdening your savings and ensure peace of mind.
Hi, I’m Dev Kirtonia, Founder & CEO of Dev Library. A website that provides all SCERT, NCERT 3 to 12, and BA, B.com, B.Sc, and Computer Science with Post Graduate Notes & Suggestions, Novel, eBooks, Biography, Quotes, Study Materials, and more.
