Financial planning is a crucial part of securing your future which includes many facets such as investing and insurance. However, in a country like India, people suck at financial planning because they never get the chance to learn more.
It is because money is such a subject which is not allowed at the table. If you come from a typical Indian household and ask your parents something about money, they will probably say, “You don’t have to worry about this. Instead, focus on your studies.
To make a change and make people healthier about money and finance, we have covered a wide range of topics related to term life insurance policy, including its benefits, factors to consider when buying, and some of the myths that surround it.
Benefits of a term life insurance policy
Before jumping on the benefits of term plans, you should know that they are available in a variety of choices. Depending on your preferences, you can choose from a wide range of plans to suit your financial needs. Here are some important advantages of term life insurance policies:
Compared to any other life insurance product (reimbursement plan, ULIP and many others), term plans require lower premiums and offer full coverage at an affordable rate. Unlike other plans, it only focuses on protecting your family from the occurrence of death without a market related investment.
Term life insurance policies also work as tax saving tools as they offer discounts and benefits in two phases. According to Section 80C of Indian Income Tax Act, premiums paid for term plans are eligible for tax deductions of up to Rs. 1.5 lakh. In addition, according to Section 10 (10D) of the Act, the proceeds of the death benefit are also fully tax free.
Easy to understand
The best thing about term plans is that they focus on one goal: to cover your risk of death. There are no technical details involved in term plans because they don’t invest your capital anywhere. All you need to do is pay periodic premiums and take advantage of life coverage.
4 things to consider when buying a term life insurance policy
To make sure that your temporary plan can help you with your family’s finances while you are away, you need to choose an adequate amount of coverage. It can be determined by assessing your current age, financial responsibilities, future goals, current loans and debts, lifestyle expenses, and the rate of inflation. You can even find the best term insurance plan for 1 Crore cover value too.
Duration of the policy
The more you buy a young term life insurance policy, the more benefits you can derive from it. To determine an ideal contract length, you need to determine the expected retirement age and subtract your current age from the number. The difference between the two should be your ideal political tenure.
Term plans offer different payment options, namely lump sum, monthly income increase, monthly income level, etc. Keep in mind that your policy’s premium is also affected by the type of payment option you choose. Therefore, be sure to choose one based on your family’s future needs.
Being a popular variant of life insurance, term plans are offered by several companies, making it difficult to choose a reliable partner. To screen for a good insurer, you should consider checking their claims settlement ratio, solvency ratio, market reputation, and financial history.
Shatter Common Myths About Term Insurance
No return insurance is worth it
There is a big difference between insurance and investing. While the latter provides monetary gains, the former protects your risk against death. It ensures that your family will not have to suffer financial depreciation in the event of death.
Plus, with the availability of term plans, you can get full coverage at very minimal rates. There is no point in confusing insurance and investing as they both serve different purposes which are essential for a sustainable future.
Buying a term plan too early or too late is not beneficial
Term plans allow you to choose the desired length of coverage based on your needs. Having said that, it is never too late or too early to buy a term plan because it is affordable anyway. The earlier you buy it, the more affordable it will be.
On the other hand, even if you buy it at an older age, it would still be more affordable than other life insurance products and you can choose a shorter term as well. What is not beneficial is not buying the policy at all.
Temporary plan coverage cannot be increased
This is one of the most common myths about term life insurance policies. However, it is completely wrong that you cannot increase your coverage in a temporary plan. Once your policy term expires, you can choose to extend it or convert it to a whole life policy.
In addition, some policies available on the market also allow you to increase the coverage of your plan through built-in customization options. While it may cost slightly more than a pure term plan, the benefits are certainly worth it.
Term insurance is much cheaper than other life insurance plans. This is the best option for people who are not financially well-adjusted, and it is also suitable for those in their early twenties. In addition, insurance is an important part of every individual’s life.
This gives you the peace of mind that your family will be taken care of no matter what. For the above reasons, we believe that a term insurance plan is a viable option for people who want to protect themselves and their families against premature death.
When it comes to choosing the right plan for you, there are many factors to consider. If you are reading this far, we hope you now know the basics of choosing the right one. term life insurance policy according to your needs.