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Life is erratic and full of unexpected turns. Every accomplishment may present fresh financial difficulties. A few big financial turning points in your life include getting married, having children, buying a house, and setting up money for retirement.
These important occasions affect your finances significantly in addition to being joyful. It is therefore imperative that you get ready for them. Term Insurance might help you prepare financially so you can enjoy these times stress-free. An essential tool that provides both financial security and peace of mind is a term insurance plan.
With rising inflation and changing lifestyles, it is critical that everyone begins financial planning as early in life as possible. A person’s financial strategy should be tailored to their own demands at different phases of life. It’s also critical to have a well-balanced combination of instruments to suit their objectives for wealth building, savings, and protection. It has been noted that individuals frequently overlook or compromise the “protection” component of financial planning in favour of the “wealth creation” component.
Indians’ discretionary income has increased during the last ten years, and they have become more consumerist. As a result, the typical Indian family’s financial habits have changed. People’s financial objectives have shifted, and instead of spending 10–20% in 2009, they are now spending up to 25–60% of their income on aspirational wants.
- Financial Support:
The family may experience unexpected financial strain in the event of an unexpected and sudden death. Anxiety and restless nights can surely be brought on by the loss of income, the weight of outstanding debt, the necessity to maintain home expenses, and the need to finance life ambitions. All of your concerns may be resolved in this case by the lump sum death benefit.
- Affordable Premiums:
A term plan is an entirely insurance-based plan without any investment component. It is the most affordable type of life insurance on the market. This implies that you can get a policy at nominal rates for a higher sum insured, which provides more security for your dependents and removes risk in the future. The premium you ultimately pay for a term policy will be less the earlier you buy it. An individual spends, on average, just 1% of his or her annual income on term insurance for the remainder of their life.
Compared to other Insurance Plans, traditional term insurance has relatively cheap premiums because it only pays out in the event that the policyholder passes away within the policy’s term. Generally, the monthly premium for a Rs. 1 crore term insurance life cover can reach as high as ₹26/day1, making it reasonably priced.
- Tax Benefits:
The majority of people on salaries attempt to invest in products that both reduce their tax liability and offer larger profits. This is a crucial component of their financial strategy. In addition to receiving a tax deduction of up to ₹1.5 lakh for premium payments made towards the maintenance of your term policy under Section 80C, the amount paid as death benefit to your beneficiaries is also eligible for an exemption under Section 10(10D). Additionally, choosing a health-related rider (such as a rider for a serious illness) may enable you to get additional Income Tax Act deductions under Section 80D.
- Assured Death Coverage:
Your family’s guaranteed returns from a term insurance plan are unaffected by outside variables, such as shifting financial circumstances that impact market-linked returns2 on other kinds of investments. It provides a pure risk cover and aids in efficiently managing the death risk.
You can review the specifics of the term life insurance policy to see how the payout occurs and how the sum assured is determined over the course of the policy.
- Riders:
By adding riders to cover any additional risks you believe there are, you may customise the policy to meet the needs of your family. When added to an existing term plan, riders like critical sickness benefits, accidental death benefits, and partial or total disability benefits increase coverage for a modest fee.
Optional add-on coverage for critical illnesses, terminal illnesses, and accidental death or disability are included with term insurance. These extra coverages raise the amount guaranteed to handle these unfortunate events in the policyholder’s life and assist the family during times of need.
These factors have, in fact, led many people to choose term insurance. Choosing the greatest term insurance plan that meets your demands and is convenient can always be a smart choice if you want to financially protect your loved ones.
- Extensive Coverage:
With term insurance, you can have flexible life coverage for a longer period of time—between five and forty years. In your twenties, if you’re young and single, a life insurance policy that lasts until age 60 can be plenty. But if you are 40 and married with children, there are certain liabilities to deal with. Here, the greatest term insurance can better insure your family because it offers a lifetime policy that lasts until age 99.
- Option for Joint Cover:
In the event that your life partner works, you may always divide up the family’s significant expenses between you. It is crucial to extend the life insurance to your spouse as a result. Furthermore, even if your life partner is unemployed, they could still have some duties related to running the household.
If your life partner is a housewife, for example, she may look after your kids, prepare meals for the whole family, and handle the essential housework. These duties need to be assigned to someone else, such as a domestic helper, in the event of her untimely death. And you will incur higher costs as a result. You might choose to acquire joint life insurance for your spouse with term insurance in India.
The fallout from the worldwide pandemic has made financial planning even more crucial in India. More and more people want to ensure their families have enough money. Starting financial planning with a term insurance plan can be a great approach to protect yourself against the dangers involved in a variety of life events. In your absence, it can assist in protecting your family and ensuring the security of their financial objectives. It has many advantages, is very adaptable, and is quite affordable.