Are You Underestimating a Term Insurance Policy?

As a newlywed, Rahul thought talking about life insurance may not be of any interest to his wife. Every time when he wants to discuss life insurance he ends up with the topics like favourite cuisine and a romantic dinner. Rahul knew that life insurance is something which he will have to discuss – sooner rather than later.

However, discussing life insurance means facing our mortality. If the thought of discussing life insurance with your new spouse is giving you cold feet, here are a few tips to get you started;

Nobody likes to think about what will happen to their family when they die but just as house insurance, mobile insurance, car insurance and pet insurance are all recognised as vital elements of protection, life insurance needs to be prioritised no matter how much you want to avoid the conversation and the decision.

It’s important to acknowledge that most people feel awkward discussing death but there are things you can do in order to make the discussion and the process of applying for life insurance a little less daunting.

If you are looking for a life cover then a term insurance plan is the best option. Such plans come with a low premium cost and provide huge sum assured amount in case of the policyholder’s demise.

The entire premium amount is allocated towards providing insurance coverage. Hence, in case of survival, no maturity benefits are provided. Many individuals, therefore, underestimate term plans and chose not to purchase such a type of life insurance policy. However, term plans offer insurance coverage along with a plethora of add-on benefits.

Following are five major advantages of term insurance policies.

1. Coverage against uncertainties

   Life is uncertain. The risk of an untimely death cannot be ruled out. In order to cover the financial losses arising out of such a risk, it is recommended to invest in a term insurance policy. Your insurance provider will pay the sum assured to your family members, thus providing a high degree of financial security when you are no longer around.

2. Benefit of additional riders

   You may enjoy the benefit of comprehensive coverage by opting for riders with your existing term insurance plan. Though riders come at an additional cost, they provide a higher level of protection. Many insurance providers offer add-ons covering accidents or critical illnesses such as cancer, heart disease, benign brain tumor, permanent paralysis of the limbs, and so on.

3. Income replacement

   In case you are the breadwinner of the family, your loved ones will be financially impaired which will make find it difficult for them to make ends meet in case of your absence. The death benefit provided in a term insurance plan, therefore, acts as an income replacement.

4. Lower premiums

   One of the major advantages of a term insurance plan is affordability. Such plans come with a low premium along with a high level of insurance cover.

5. Tax benefits

   Another reason not to underestimate a term plan is the tax benefits. Premiums paid towards term plans are eligible for tax deductions up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. You may also avail of tax benefits on the death benefit amount under Section 10(10D) of the Income Tax Act, 1961.

   A term insurance plan, therefore, cannot be underestimated as it offers a lot of benefits. It is the minimum level of protection required to provide financial security to your loved ones in case of your sudden demise.