When Should You Consider Buying A Term Plan?

When it comes to life, you can never foretell what the future has planned for you. Although death is inevitable, you can still make some perquisites to make your family members’ lives easier. If you want to ensure financial safeguard for your family in the event of your unfortunate death, then a term life insurance plan is a must-have for you.

With a reliable term plan, you can prepare for various uncertainties that you may encounter in your life. It is also considered as one of the most cost-efficient ways to mitigate risk associated with the future. Moreover, as term insurance requires lower premiums as compared to other plans, especially when it’s an online term plan, they are fairly popular in India.

The plan offers your chosen nominee a lump sum amount of money in the event of your death. Alternatively, if you survive throughout the policy tenure, then some plans also provide you a return of premium benefit with the policy. However, it’s not available in all the term insurance plans available through different providers.

While you purchase term insurance for the safety of your loved ones, you must keep a few things in mind to make the most out of your policy:

Ensure that your preferred term insurance provides sufficient income to support your family’s daily expenses in case of your unfortunate demise. Make sure that your chosen plan’s tenure covers you up to your retirement age. As a general rule of thumb, choose a plan with at least a maximum tenure of 65 years

Keeping the above two things in mind, you can easily choose a great term life insurance plan as per your financial requirements. Let us now discuss the various benefits of term insurance that make it one of the best investment options available in India.

Why Must You Purchase a Term Plan?

Here are a few reasons to consider investing in online term plans and secure the future of your loved ones in your absence:

1. Lower Premiums

As there is no market-linked investment involved in term plans, their premiums are generally lower than other life insurance policies. By only paying around 1% of your annual income, you can gain a life cover through these policies. Generally, if you choose a policy worth one crore, then the premiums might be estimated at Rs. 7,400 per annum.

2. Greater Flexibility

The best thing about online term plans is that they are highly flexible. They don’t include health plans as a mandatory factor, which makes them easily accessible to people. Moreover, you can even personalize the plan as per your requirement for re-evaluation.

3. Financial Security 

In case you die, unfortunately, any of your existing financial liabilities will have to be paid by your family, which can be very draining, especially if you’re the only breadwinner of the family. However, such situations can be prevented by investing in a good term life insurance plan to take care of your family’s financial needs in your absence.

4. Several Riders

Riders are optional benefits that can be added to your plan as per your financial and coverage requirements. To add these plans to your term policy, you have to pay a nominal fee. That’s why it is often suggested to add only necessary riders to your term plan. There are several types of riders that can be added with an online term plan such as critical illness, permanent or partial disability, accidental death, and so on. Before you add a rider to your policy, make sure you read the related documents thoroughly to ensure that you never miss anything.

5. Higher Claim Settlement 

If you have provided correct and true details about you while purchasing a term insurance policy such as your habits, financial conditions, health conditions, and so on, then your dependents will find it easier to get the claim settled without facing any rejection. According to the mandates set by the Insurance Regulatory and Development Authority of India (IRDAI), an insurance company cannot claim a non-disclosure after two years of keeping the policy active.

6. Zero Brokerage

When you buy an insurance plan  traditionally, you may have to pay Brokerage charges added under premium allocation charges, which is usually a recurring expense. In simple terms, whenever you pay an insurance premium, a small portion of it is used as brokerage charges. While this expense decreases over time, it  counts for nearly 5-6% of the total premiums you’ve paid throughout the policy tenure.

However, if you purchase an online term plan, then you don’t have to pay any brokerage charges as there are no middlemen involved in the process. This eventually allows you to save that additional 5-6% amount that adds up to your financial corpus. Therefore, make sure you purchase a term plan online for greater convenience and affordable rates.

7.  Tax Benefits 

As per the mandate of the Income Tax Act of India, the premiums paid towards a term life insurance policy and the benefits gained through it are completely free from any kind of taxation. This means by investing in term insurance you can also save a significant amount of money from taxes. The benefits that can be availed for tax deduction also include the death benefit which is paid to your selected nominee in the event of your unfortunate death.

The Takeaway 

As several people are getting aware of the importance of life insurance, more and more people are attracted to online term plans because of their impeccable set of features. Whether you need to pay off a mortgage, fund your children’s education, or help your family bear your funeral costs, a term plan allows you to accumulate financial resources for all such purposes. Therefore it is certainly an important decision to purchase term insurance as soon as possible.

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