5 Reasons You Need to Include Term Plan in Your To-Do-List

On Jul 5, 2021

There always comes a point in every individual’s life when they must get serious about finances and start thinking of their future with their spouse, children, and parents. With the added financial responsibility, it would make sense to prepare a safety net for the family as well, and life insurance plans allow you to easily prepare for the worst-case scenario by financially securing your family in your absence.

One of the simplest forms of life insurance plans is the term insurance policies, which pay out the sum assured to the policyholder’s family/beneficiaries if the insurer dies during the policy term. You can also opt for a term plan with a return of premium, in which the policyholder can enjoy the annualised return of his premium towards the term insurance as a survival benefit.

There are plenty of benefits that term insurance offers, which will ensure that you and your family not only have the right cover but also a stress-free financial backup for everyone’s wellbeing:

Financial Security For You And Your Family

Simply put, a term insurance policy is exactly what your family needs to be financially independent in your absence, especially if you are the breadwinner of the family. The sum assured they receive in the unfortunate event of your death, should ideally work as a replacement of your earnings. An important thing to consider here is the right amount according to you that your family will need as sum assured.

While there is no way to be accurate, you can still tally up all the current and impending obligations you and your family are likely to face like marriage, and child education. Add your current liabilities like a car or home loan EMIs, and credit card bills to that and then subtract the figure from your current savings or investments. The amount you are left with should ideally be the sum assured in your term insurance policy.

Low Premiums For Best Term Plan

Since there is no investment element in the amount insured, premiums for even the best term plan will be cost-effective. The purpose of this type of insurance policy is to offer life cover and financial support to the family of the deceased, and this policy does just that.

Another way to ensure your premiums are as low as possible is by buying term insurance from your early earning days itself. The younger you are, the fitter you will be and with a minimal medical history yet, making it easier for you to score a very less premium amount and still opt for a large sum assured. You can also select your premium paying frequency and opt for a monthly, quarterly, or yearly mode of payment.

Low Rate Of Claim Rejections

One of the biggest term insurance benefits is the high claim settlement ratio that most of these policies and insurance companies can boast. If your policy has been active for at least 10 years or more, then it reduces the chances of claim rejection as well.

You, too, can ensure that your family doesn’t have to worry about the claim rejection by consulting an advisor while picking the right term insurance plan and provider and disclosing everything about your health, habits and medical past.

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Additional Riders With Term Insurance

You can choose from a variety of riders that come along with your term insurance policy at a very nominal cost. If you want to choose the best term plan for yourself, then compare the additional riders of term insurance policies of different providers, along with their premiums.

You will easily be able to pick a plan that is customised to suit your family’s needs well. From accidental death to a waiver of premium and from permanent or partial disability to critical illness, you will find riders of almost all kinds to add to your term insurance plan.

Tax Benefits

Salaried people often heave a sigh of relief when they realise that the premiums they pay towards their term insurance plan, qualify as tax-saving instruments. If your yearly premiums do not exceed 10% of your sum assured as per the policy, then you can claim a tax deduction of up to Rs. 1,50,000 under section 80C of the Income Tax Act of 1961, as per the old regime.

One of the many advantages of term insurance is how flexible it is as an insurance policy. If you are not opting for a very high coverage amount, then you may not need any health check-up either. Most insurance companies simply allow you to sign a health declaration form and apply for the term insurance.

Moreover, the add-on riders offer you the flexibility to customise your insurance and make it the best term plan for you without altering the basic policy itself. Term insurance is definitely the need of the hour, and the sooner you realise that and buy an insurance policy, the better it will be for your worry-free present and your family’s stress-free future.