Planning your finances has never been more of a priority than today. The year of the pandemic brought the need for efficient financial planning in sharp focus. We are now more aware than ever that life can be incredibly uncertain. Securing your family against unforeseeable risks with term life insurance can be the right move in such a scenario.
In case you don’t already have a term insurance policy, this may be the right time to start looking for it. Regardless of your current life stage, buying term life insurance can prove to be a valuable investment for several reasons. It gives you a sense of security and peace of mind that your family can live a life of dignity and financial independence, even in your absence.
Besides, term life insurance is one of the most convenient and straightforward ways of securing your life.
If you are responsible for your family’s financial well-being, the right term insurance policy can be the cornerstone for a secure future. Let’s understand what is life insurance in detail and discuss some other benefits that can be valuable for you and your loved ones:
1. Support for Emergencies
A sudden unfortunate event can considerably damage your family’s financial situation, especially if you are the sole source of income in the family with a number of dependents. Having a good term life insurance plan can act as a shock absorber for such untoward events.
The death benefit provided by a term insurance policy can minimize the impact of losing an income source. At the time of buying the policy, you can select the sum assured, which will be payable to your nominee in case of your untimely demise. Depending on your family’s financial profile, you can choose the term life insurance coverage to replace the income source entirely or serve as a reserve of funds.
2. Long-Term Security
A term insurance policy is a financial tool that covers your life for an extended period. Some insurance providers also offer plans that provide lifetime security with term life insurance. It is often advised to buy such a plan at an early stage in life to reduce the strain on your budget and get long-term security.
However, you can enjoy the benefits of term life insurance at any stage in life. For instance, depending on the life stage, when you purchase term life insurance, it can replace your dependents’ income, cover the expenses of higher education for a child, repay outstanding debt, and more.
Understanding your current and upcoming expenses can give you a clearer perspective on the benefits you require from a term insurance policy. So, remember to assess your pattern of expenditures and align them with your investment behaviour appropriately.
3. Affordable Rates
Term life insurance is a perfect blend of simplicity and affordability. Since most policy buyers find it challenging to keep up with the various clauses and specifications of an insurance plan, a term insurance policy serves as a favourable option. You can enjoy security for an extended period with minimal rates of premium with term life insurance.
If you buy it early in life, the burden of premium payments can be reduced even further. There are insurance policies available in the market that allow you to finish the premium payment liabilities much before the policy coverage ends. This way, you can remain financially covered without paying premiums regularly for a long time.
4. Add-on Availability
Apart from the basic coverage that you get with term life insurance, you have the option to enhance it further. Insurers provide riders to broaden the coverage scope of the term insurance policy. It can be used to create a comprehensive safety net around you and your family against a variety of risks.
You will find riders with critical illness benefit, partial or complete disability benefit, return of premium benefit, waiver of premium benefit and much more, depending n the insurer. Generally, you can opt for riders at the time of buying the term life insurance by paying an additional premium for it. In some cases, you may be allowed to add riders later during the policy period as well.
5. Tax Benefits
An important benefit of term life insurance is that it helps reduce the tax liability of an individual. For taxpayers, an investment that offers financial security as well as tax benefits, can be ideal. You can choose to stay secure for a long time without putting tremendous pressure on your pocket.
Under Section 80C of the Income Tax Act, 1961, you are eligible for annual tax benefits of up to Rs. 1.5 lakhs on the premiums paid for term life insurance. In addition to that, you can also avail of the tax benefits under Section 80D of the IT Act if you opt for health and critical illness riders.