One of the harsh realities of life is its unpredictable nature. No matter how much we plan to live the life of our dreams, an unfortunate incident like sudden illness, accident, disability or even death can not only affect us personally, but also our family.
The sudden loss of the breadwinner can not only have an emotional impact but also a financial one which would become difficult for the family members to bear. At times like these, buying a term insurance plan can be a salvation. It provides quick financial protection for your family.
What is term insurance?
A term insurance plan provides financial coverage to the policyholder for a fixed term within which if he or she dies, the applicant becomes eligible to receive the sum insured. However, if the policyholder survives the term, the premium paid to date is not refunded. In this type of life insurance plan, the premium is lower while the sum insured offered is quite high. For example, a one million rupee term insurance policy for a 25-year-old male non-smoker will cost a premium of only 8,364 rupees per year.
Why should you buy
Offers financial security: A term plan is not an investment plan. This is an insurance plan that helps you build strong financial coverage for your family even after you die. In the event of an unfortunate event – your death or disability, the family member – the candidate you nominate, receives a lump sum which can be used to meet their daily expenses and repay your loans, if any.
Depending on the growing needs of the family, you can revise the amount of coverage. For example, if you get married at 30 and plan to have a child at 34, depending on your stage of life and your increasing responsibilities, you may choose to increase the amount of coverage.
Low premium rates: In comparison to other types of life insurance plans, the term insurance plan is affordable. For example, for a 30-year-old man, a term insurance scheme of Rs 1 crore for 30 years would cost a premium of Rs 10,000 per annum. Additionally, the premium for this type of plan remains the same for the duration of the plan, regardless of your age.
Very flexible: The term insurance plan can be purchased online or offline depending on your preference. You do not need to undergo a medical checkup for coverage amount below 50 lakh and you can also customize the plan according to your growing needs. In the future, you can also change candidates at any time.
Low claim rejection: This type of life insurance has a low claim rejection rate, which means that the chances of a claim being rejected are very less unless you have not disclosed any serious facts related to your health and habits. of life.
Runners: A term plan can be purchased with various riders including waiver of premium, permanent disability, critical illness rider, accidental death rider, and others. This can help you provide better protection for your family.
Fiscal advantages: This type of plan provides a tax-free death benefit to the policyholder’s agent. Under the Income Tax Act 1961, a policyholder can also get tax deductions up to Rs 1,50,000 under Section 80C of the Act, while the beneficiary can get tax deductions up to Rs 1,50,000 an exemption under section 10 (10) D to receive any amount under the sum insured.
Based on the reasons above, it’s clear why you should buy a term insurance plan. However, you should purchase the plan at a young age as the premium cost will be lower and will also provide protection for your family in the longer term. Never fail to pay the premium on time and always disclose all the facts – by doing so, your beneficiary will benefit from a speedy claims process.
(Viral Bhatt is the founder of Money Mantra – a personal solutions company)
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Posted: Sunday May 15th 2022, 07:00 IST