What is term insurance plan?
Term insurance plans in India are amongst one of the most affordable ways to secure oneself and one’s family from the unforeseen loss of the financial provider in the family.
How do term insurance plans protect family members?
A term plan can secure your loved ones in many ways. Here are five of them –
1. Mitigates Lifestyle Risks
The consumption of unhealthy food, taking on copious amounts of work stress, and living a sedentary lifestyle all contribute to an increase in a variety of lifestyle-related ailments. These include diabetes, heart disease, cancer, and more. Such illnesses were not as common earlier as they are today, with their prevalence indicating that health is not at the forefront of peoples’ minds. Besides being life threatening, these illnesses can take quite a large toll on one’s pocket. In addition to the death benefit provided, term insurance plans in India can also offer added protection against these critical illnesses. If diagnosed with a critical illness that the policy can cover against, the policyholder can be paid a pre-decided sum as a benefit as defined in the terms and conditions of the respective term plan.
2. Tax Benefits
When you buy term insurance online or offline, you can avail certain tax benefits. All term insurance plans in India fall under the list of policies that one can avail of tax benefits as per Section 80C of the Income Tax Act, 1961. According to this Section, the premiums paid towards one’s policy are exempted from taxation. Additionally, any death benefits offered by the term insurance will also be tax-free as per Section 10 (10D). The term insurance tax benefits mentioned above are subjected to provisions stated in the Income Tax Act, 1961.
3. Added Riders
Beyond covering critical illnesses, to expand their range of coverage offered, term plans offer their policyholders a variety of add ons to pick from. These riders increase the utility of the policy. With the aid of these riders, the policyholder has the option to avail of more benefits based on her/his needs at nominal extra cost. Keep an eye out for riders such as waiver of premium, disability cover, and other such riders. Without compromising on coverage benefits, you can be protected at lower premiums than you would be paying for traditional life insurance. Compare add-ons carefully based on your needs and financial capability.
4. Protected Assets
The luxuries of today’s world have left many in amassed debt. A car loan, home loan, or other forms of debt can be easily serviced but instantly turn into a liability for your loved one’s if you were not around. When one delays the payment of their installments, this leads to a potential loss of assets. With a term cover backing you up, you can live with the peace of mind that your family can cover any debt and your assets will remain untouched in your absence. The sum assured that is guaranteed by most term plans can be instantly used to pay off debt or by making regular payments to service it.
5. Takes over Responsibility
A risk to your life means that your family is vulnerable. A term plan ensures that your loved ones need not compromise their essential or even indulgent lifestyle in your absence. The payout your beneficiary/nominee will receive from your term plan may be enough to meet your family's household monthly expenses depending on the plan chosen by you. The Sum Assured from term insurance plans in India can also be used for your loved ones to fulfill any essential life goals like higher education or buying a home.
A term policy protects your family in many ways. It assumes responsibility for their financial well-being, protects your assets, extends coverage based on one’s needs through riders, offers tax benefits, and addresses the risk associated with lifestyle illnesses.