The Importance of Investing Salary in Term Insurance Plans
Term life insurance offers an economical way to ensure that your family does not face financial hardships due to an unforeseen event. It covers essential living expenses, outstanding debts, and other financial responsibilities, providing financial stability to those who depend on you.
Term insurance offers significant coverage at a relatively low premium, making it an ideal choice for someone with a ₹35,000 monthly income. The key benefit lies in its simplicity—offering life coverage. Even with a moderate salary, it is possible to secure a plan that offers robust protection.
How Does Term Insurance Work for Individuals Earning ₹35K?
The way a term plan works is by offering life insurance for a set amount of time. The nominee gets a lump sum or periodic payment (depending on the option chosen) known as the sum assured if the life assured dies within specified time frame i.e. the policy term . The amount obtained from the sum assured can be used to cover Living expenses, debts, and upcoming commitments etc.
Term insurance is especially advantageous for those earning ₹35,000 per month for the following reasons:
- It offers high coverage at low premiums, making it an affordable option. [2]
- The death benefit received to the life assured's family can help in handling debts, outstanding loans, and EMIs in the event of the life assured's passing. [2]
- Some term plans come with a “Return of Premium” (TROP) feature, which refunds premiums paid if the life assured survives the policy term, unlike standard term insurance plans that only provide life coverage. [2]
Key Benefits of Term Life Insurance for ₹35K Salary Earners
Financial Security
The peace of mind that comes from knowing your family is financially secure in your absence is priceless. A term insurance plan help in ensuring that your loved ones do not face a financial crisis if something happens to you. This is especially crucial for individuals with dependents such as children or elderly parents who rely on your income.
Tax Benefits
One of the additional advantages of term life insurance is the tax benefit. Under Section 80C of the Income Tax Act (in case of old regime), the premiums paid for a term insurance plan are eligible for a deduction of up to ₹1.5 lakh annually. This can significantly reduce your taxable income, leaving you with additional savings that can be directed towards other financial goals.[1]
How Much Coverage Should You Opt for in a Term Plan with ₹35K Salary?
When considering a term insurance plan, it’s important to choose an appropriate coverage amount. A common recommendation is to select a sum assured that is 10–12 times your annual income.3 For example, if your monthly salary is ₹35,000, your annual income would be ₹4,20,000, and the ideal coverage amount would range between ₹42 lakh to ₹50 lakh.
However, coverage needs can vary depending on several factors such as:
Outstanding debts (e.g., home loan, car loan)
Children's educational expenses
Financial Goals
Retirement needs
Choosing an accurate coverage amount that meets your family’s future needs is essential.
How to Choose the Right Term Plan for a ₹35K Monthly Salary
Selecting the right term insurance plan can be overwhelming due to the variety of options available. Read below to make an informed decision
Premiums:
Ensure the premiums are within your budget. Even though term insurance is relatively inexpensive, it’s essential to choose a policy that aligns with your financial situation.
Adequate Coverage:
Ensure the policy offers sufficient coverage based on your income, dependents, and financial obligations. A coverage amount of 10–12 times your annual salary is typically recommended. [3]
Riders for Added Protection:
Some term plans offer additional riders like critical illness coverage or accidental death benefits at an additional nominal premium. These riders can help provide more comprehensive protection.
Claim Settlement Ratio:
Look for an insurer with a high claim settlement ratio. The claim settlement ratio indicates the percentage of claims an insurer has successfully settled , therefore to ensure that your nominees receive the sum assured efficiently in case of a claim and hence, you should look for an insurer with a high claim settlement ratio. [6]
Conclusion
A term life insurance plan is one of the best ways to provide for your family’s financial security. With low premiums and extensive coverage, you can ensure that your loved ones are financially protected, even on a modest income. It’s essential to select the right plan that suits your needs and to carefully calculate the coverage required. Taking these steps today can help secure a brighter, more stable financial future for your family.
FAQs
What should be the ideal coverage amount if I earn ₹35,000 per month?
The ideal coverage should be 10–12 times your annual income. For a ₹35,000 monthly salary, this would be ₹42 lakh to ₹50 lakh.[3]
Can I increase coverage for a ₹35K salary term insurance plan?
Yes, coverage can be increased by choosing increasing cover, buying new policy or by adding riders such as critical illness coverage.
Can I buy term insurance with a 35k salary per month if I have pre-existing health conditions?
Yes, but you would have to declare any pre-existing medical conditions. Depending on your health and other factors, insurers will fix the premium payable etc . [3]
Can I buy term insurance for my entire family if I earn 35k per month?
Yes, you can buy individual term policies for family members based on your coverage needs & financial capacity.
What would the premium be for a term insurance plan with ₹35K salary?
The premium will depend on your age, coverage, and policy term amongst other factors.
How does the claim settlement process work for term insurance plans?
The claim settlement procedure entails knowing the type of claim, making sure that disclosures are clear, paying premiums on time, filing the claim as soon as possible, and supplying the required paperwork for validation. [4]
What is the best age to buy term insurance?
It’s ideal to purchase term insurance at a young age to lock in lower premiums and gain longer coverage.
Are riders available with term insurance plans for ₹35K salary earners?
Yes, various riders such as critical illness rider, accidental death benefit rider etc can be added to your plan at an additional nominal premium for enhanced benefits. Can I get a refund of my premiums if I don’t claim in a term insurance plan?
In a standard term plan, premiums are not refunded. However, there are plans with a Return of Premium option, where premiums are refunded at the end of the policy term subject to terms and conditions of the policy.[5]
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