Life is short, and no one can know what will happen next. Term insurance is an excellent way to ensure that your family can pay their bills if something unfortunate were to happen to you. Having a term plan helps you get ready for the unseen future. If a person lives through the policy term, there are no death or maturity benefits. However, very recently, insurance companies started offering a benefit where, if the insured person survives, then the insurance provider pays back a portion or whole of the total premium paid.
Six excellent reasons to get term insurance!
There are several known term insurance benefits. Following are some of the reasons to buy a term plan.
1) Low premiums
There is no element of investment in the insured amount. Additionally, the insured amount in term insurance is not risked by market fluctuation. Hence, the premiums for any term policy are usually much lower than those for other insurance policies. To get a life cover, a person might only have to pay about 1% of his annual income. For example, the premium for a policy worth one crore would be approximately Rs. 7,400 per year (based on a young age and good health conditions).
2) Provides financial security
Untimely demise is unfortunate, but so are the family’s long bills. Investing in a term plan is a good idea to ensure your family is not left struggling with daily expenses. It takes care of the family’s financial needs after you.
3) Highly flexible
Term insurance plans in India are known for their flexibility. You don’t require an existing health plan to buy a term plan. They are available online and offline. You can change the plan and its term whenever necessary.
4) Low claim rejection
When you buy a term plan, make sure you tell the truth about your health, finances, habits, etc. According to a rule from the Insurance Regulatory and Development Authority (IRDA), no insurance company can say that facts were not disclosed after the policy has been in effect for three years. This rule issued by the IRDA makes term insurance plans in India a safe option for the insured.
5) No brokerage
The brokerage fee is usually listed under the premium allocation charges and is often a recurring cost. A certain amount goes toward the brokerage fees every time you pay the premium. The percentage of your payment that goes to brokerage keeps going down slowly over time. Many times, brokerage fees make up about 5 to 6 percent of the total premium paid. Term plans purchased online have no brokerage fees. This way, you save 5-6% of your hard-earned money.
A policyholder’s additional needs can be obliged with optional benefits, known as riders. Some riders that can be added to term plans are critical illness, demise due to an accident, permanent or partial disability, and so on. However, there is a small fee that needs to be paid to avail these riders. Thus, you should only buy a rider if you really need it. It is recommended that you read the terms and conditions of the rider to understand its exact benefits.
Why buy term insurance?
- Affordable premiums for greater coverage.
Pay a small amount to get life cover worth crores.
2. Coverage in every way.
Protect yourself from financial loss, illness, and other potential hazards with optional benefits, including income on disability, critical illness coverage, and premium waivers.
3. Protection against loans, debts, and other liabilities.
Term insurance helps your family pay off your debts and liabilities in case of your untimely demise.
4. Protection for up to 99 years.
Term plans cover you for life up to 99 years of age.
5. Buy early and save more!
When you’re young, your premiums are less. Buy early and pay the same amount for the entire policy term.
6. Rs. 46,800 worth of tax benefits.
Term insurance can save you tax money against the premium paid.
Please note that tax savings with term insurance depend upon your choice of tax regime (old or new).
There are many good things about a term plan. From educational needs to miscellaneous family expenses, unpaid loans or debts of the insured, and even their burial and funeral costs, are some of the things that can be addressed via the term insurance benefits. Investing in a term plan is an intelligent choice, primarily when the recent pandemic has taught us volumes about the unpredictable nature of life. You can calculate your term insurance premium using a term insurance premium calculator available online.
When opting for term insurance plans in India, some important things to remember are:
- Your family should be able to get enough money from the term insurance in case of your unexpected passing away.
- The term plan should cover the length of time a person wants to work. A term policy should cover at least 65 years.