When buying an insurance policy, the first question that crosses the minds of many is “Do I need this policy?”. But going by the changing dynamics of the world, eventualities have intensified in their occurrence and intensity. Hence, the necessity of a term plan cannot be negotiated. All financially independent individuals - irrespective of their financial status, occupation, age, general health, etc., should invest in a comprehensive term policy. A term plan offers the purest, economical, and the most extensive form of coverage for you and for the ones you love.
Here are some advantages of a term plan that justify its applicability to all:
- Term plans more economical as compared to other insurance policies: A term insurance is inarguably the most cost-effective form of insurance. It provides comprehensive coverage at very economical premium rates. The premiums of a term policy are much lower than the equivalent cash value policies. Moreover, women and non-smokers enjoy lower premiums.
- Term plans offer pure coverage without any saving or investment component: A term plan is called the purest and simplest form of insurance. It has no complications because it simply offers coverage in return for premiums. There is no saving or investment component.
- Term insurance allows you to increase the cover value with varying stages of life: Term insurance policy allows the insurer to increase the coverage with different milestones of life. This could involve being married, having children, education, marriage, grandchildren, etc. The policy can grow along with your needs. Moreover, the plan offers different payout options, including immediate, recurring, increasing, etc., to suit the needs of the insured.
- Premiums paid and maturity amount of a term plan are exempted from tax: As per the Income Tax Act of 1961, the premium of a term insurance plan is exempted from tax up to ₹1.5 Lakhs under Section 80 C. Also, as per Section 10(10D), the death benefit (and maturity benefit under Return of Premium policies) is exempted from taxation.
- Term policy offers multiple rider benefits to maximize coverage: A term plan allows the insured to assure not only a death benefit but also security against uncertainties such as accident, permanent disability, critical illness, etc. Different riders can be added to the plan to enhance the coverage.
Situations and needs for which a term plan is most suitable:
- For people with restricted budgets, a term plan costs less than cash value insurance.
- For single and low-income earners, who desire a comprehensive coverage at economical cost, a term plan is the best buy.
- For new business owners or people in new careers who require additional money for other ventures, term plans can help save money with low premiums per month.
- For individuals that have large loans or specifically loans borrowed at high interests, the risk can be covered by buying term insurance to pay off these loans.
- For those requiring an inexpensive coverage for employees in terms of a welfare gesture, the premium paid can be entered as a business expense in accounts.
- People that desire cash value but are not capable of paying premiums currently, term life insurance can be converted to cash value insurance later in life when paying capacity improves.
- For those that desire additional coverage for a specific period along with their cash value insurance policy, term insurance could be used to satisfy the added cover needs.
- For individuals that believe in buying an economical life cover, affordable term plan premiums can help invest the saved money in other ventures for capital earnings.
Overall, a term policy should be an essential part of every individual’s financial plan. It is the minimum guarantee that is required for your family’s security. You can purchase an online term plan at competitive rates, and check your premiums through the term life premium calculator. The cover helps your family sustain the standard of living and continue to live comfortably in your absence. Moreover, the policy can be used to pay off certain obligations and stand the test of trying times.