What Type Of Life Insurance Is Suitable For Unmarried People?

If you think you don't need insurance as an unmarried person, you should think again. You may have parents who are financially dependent on you if you are young and unmarried. With time, you would be married and have children. And many hopes, plans, and aspirations can be crushed by an unexpected demise. Here, a term insurance policy can be the blessing that would help your family get out of any financial misery caused due to the unfortunate event. Read on to learn more about term insurance plans and find out whether they are suitable for you or not.. 

How Does a Term Insurance Plan Work?

A term insurance plan is the purest type of insurance since it does not have a maturity value and only offers protection. This is why the premium to sum assured ratio is high in term plans - a high life cover can be secured at affordable premium rates. The premium is computed based on one's age, the quantity of coverage (sum assured), and the time period for which insurance is necessary. The insured must continue to pay the premium until the completion of the set period. The insurance company pays the family the sum assured if the insured person dies during the period.

What are the Benefits of Purchasing a Term Insurance Plan?

Here is the list of benefits of purchasing a term insurance plan -

1. Affordability - The most notable benefit of a term plan is that you can get a lot of life insurance coverage for a lot less money. Furthermore, premiums for young applicants are lower and remain constant during the policy term.

2. Flexibility - Depending on your cash flow, you can pay the premium monthly, bi-annually, or annually. Single premium plans allow you to pay your entire payment in one go, and missed payments and insurance termination do not become a problem.

3. Loan Repayment - You or your parents may have borrowed money to pay for your education. Once you have secured the job, it is up to you to pay back the debt. You can purchase term insurance to utilise the money to repay loans such as college loans, vehicle loans, and credit card debt after you.

4. Financial Security - The lump-sum term plan death benefits can be put into investments and make a lot of money to fulfil your family’s future dreams and aspirations even after your demise. Moreover, if your beneficiaries require regular financial assistance, you can set up monthly payments to meet their living expenses.

5. Tax Benefits - The premiums are eligible for tax deductions up to 1.5 lakhs under Section 80C of the Income Tax Act (ITA), 1961, one of the most popular term plan perks. This advantage helps you save money on taxes. Aside from this benefit, you can obtain additional rebates under Section 80D if you choose health-related riders.

Furthermore, according to the terms of Section 10(10D) of the Income Tax Act, death benefits provided to your beneficiary are tax-free.

Take Away

The term insurance plans are useful financial planning tools because of their multiple benefits. You may not have responsibilities and liabilities now, but in future, when you will have financial dependents, you would want to protect them from any financial distress after your demise. So, purchasing an affordable term plan with good coverage while you are young is a wise decision.

Also read - How Is Claim Settlement Ratio Important While Purchasing A Life Insurance?

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.