Know How A Term Insurance Plan Can Be Your Financial Support

The past decade has seen an increase in the disposable income of Indians coupled with consumerism. As a result, there has been a shift in the way an average Indian family spends money. Financial goals have changed and people are spending as much as 25 to 60% on their aspirational needs as opposed to 10 to 20% in 2009.

The rise in lifestyle inflation demands meticulous financial planning that can reduce overspending, generate wealth as well as help you save enough for important milestones such as the education of your children and your retirement. One of the foremost priorities on your financial checklist should be buying a term plan as soon as you start earning. It helps keep your family financially secure even in your absence with a concrete safety net to meet their expenses and sustain their current lifestyle. 

Why Term Insurance Can Be Your Financial Support?

Let us take a look at some of the other reasons why term insurance should be a part of your financial roadmap:

1. Affordable Premiums

A term plan is a pure insurance plan with no element of investment. It is the cheapest form of life insurance available. This means you can buy a cover for a higher sum assured that offers more protection to your dependants and eliminates future risk and you can do so at nominal rates. The earlier you purchase a term policy, the lower would be the premium that you end up paying. Only 1% of the yearly income of an individual on an average is spent on purchasing term insurance for the rest of his or her life.

2. Financial Security

If you are the only earning member of your family, your absence could leave your family financially vulnerable, especially if you had taken additional liabilities such as a loan or mortgage when alive. A term plan provides you the assurance that your loved ones will be financially secure and free to pursue their goals and dreams.

3. Riders

You can personalize the policy to suit your family requirements by adding riders to cover any other risks that you perceive. Riders such as critical illness benefits, accidental death benefits, partial or total disability benefits, cost a nominal amount and provide an enhanced amount of coverage when added to an existing term plan.

4. Tax Benefits

Most salaried individuals try to invest in options that give higher returns as well as help them save tax. This forms an important part of their financial planning. Not only can you enjoy a tax deduction of up to ₹1.5 lakh on premium payment towards term policy maintenance as per Section 80C, but the amount paid to your beneficiaries as death benefit also qualifies for exemption under Section 10(10D). Further, opting for a health-related rider (for eg: critical illness rider) can help you qualify for additional deductions under Section 80D of the Income Tax Act.

5. Customizable

You can tailor your term insurance plan to your unique needs and goals and those of your family. You can opt for three different types of coverage: (a) level, (b) increasing coverage, (c) decreasing coverage, as per your needs. You can choose from different payout options: (a) lump sum payout (b) part lump sum, part monthly income payout or (c) monthly income payout. You can also choose to cover your spouse under the same plan. 

Conclusion

Remember to declare any health conditions, lifestyle diseases and habits openly when you buy a term policy to ensure your claim is not rejected. Financial planning for the future is incomplete without a pure life cover that reduces risk, helps you be prepared for future uncertainties and is also cost-effective.

Also read - Saral Jeevan Bima And Its Various Benefits Uncovered

Here's Why You Should Buy Term Insurance From Your First Salary

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.