Owing to the fickle nature of life, we cannot avoid the advice to purchase term insurance by financial advisors. A term plan does more than just provide a life cover. It ensures that in your absence, your family does not have to worry on the financial front. While it is recommended to buy term insurance early in life, insurance companies nowadays also provide the option to buy a term insurance plan for senior citizens. Additionally, aside from securing yourself, you can even buy a family term insurance plan to cover different members of your family for enhanced protection. In a world that is characterised by infinite possibilities as well as uncertainties buying a term plan for the family is perhaps the wisest addition to your investment portfolio.
What is Term Insurance?
Insurance is often considered a complex matter which discourages potential buyers from reaping term insurance benefits. Contrarily, a term plan is amongst the easiest insurance to understand. In essence, term insurance provides financial protection for a definite tenure by charging a premium amount (based on age and health) to the policyholder. If, unfortunately, the policyholder dies when the term is active, the nominees are compensated with the sum assured. Buying a family term insurance plan extends the financial protection to your family and loved ones.
Term insurance plans offer multiple ways of policy customisations to ensure that you find the insurance coverage of your choice and one that matches the analysis of your financial goals. Following are a few options for term insurance customisation that is specific to nature and extent of coverage offered:
- Level Term Plan: This is a simple and hassle-free insurance cover wherein the periodic payment of the premium, the policy tenure, and the sum assured is defined at the time of registration. These plans have a fixed premium amount until the maturity of the policy. It is a great family term plan as it offers a sizable cover in the event of the policyholder’s untimely death.
- Decreasing Term Plan: A family term insurance plan should take into account the changing responsibilities and liabilities at different stages in life. Considering this, the cover for this plan keeps decreasing by a set percentage every year, and the premium charges for it is comparatively lower.
- Increasing Term Plan: Opposite of the former, the sum assured for this term insurance keeps increasing with a definite percentage every year. This family term plan considers the rising cost of living and inflation.
How a Term Plan Secures Your Family
A term plan for the family acts as a safety net to ensure your loved one’s financial wellbeing even in your absence. The term life insurance coverage can act as an income replacement or help build a corpus for long-term financial goals. Here are some ways in which term insurance secures your family against unpleasant scenarios:
- Financial Safety: A misconception harboured concerning term insurance is that you only need one if you are married. However, you might have financial dependents even before marriage, and in the event of your untimely death, you can leave them in a vulnerable situation.
Be it aged parents, or a spouse, or children, a term plan ensures that they are not in a compromised situation if you are not around. It is also highly beneficial for individuals who have liabilities, such as a housing loan or a personal loan, under their name. You should decide the term life insurance coverage based on your financial situation and lifestyle.
- Affordable Cover: One of the biggest term insurance benefits is that it offers a high cover at extremely reasonable premium costs. Some valuable tips to further bring down this cost include buying term insurance early in life, kick the habit of smoking, and buy insurance online.
- Senior Citizen Cover: Contrary to popular belief, even senior citizens are eligible for term insurance. The term insurance plan for senior citizens is usually a pure protection cover that offers a death benefit. Another thing to bear in mind is that a term insurance plan for senior citizens has a maximum entry age ranging from 55 to 65 years, and the maturity age goes up to 85 years.
- Flexibility: Acknowledging the varied financial concerns, insurance providers today provide a host of policy customisation options. There is flexibility to choose from the different payment mods and options and choosing the tenure of the policy.
- Tax Benefits: Not only can you protect your family with term insurance but also save on taxes. The premiums paid up to ₹1.5 lakhs towards term insurance are tax-deductible under Section 80 C of the Indian Income Tax Act. Even the sum assured is completely free from taxes under Section 10(10D).
- Enhancing with Riders: Riders are additional protection that strengthens a basic life insurance policy. They offer benefits over and above the sum assured subject to certain conditions. Critical illness rider, for example, will provide you with a lump sum upon diagnosis of a critical illness. Alternatively, an accidental death benefit rider will compensate for accident-related liabilities.
Saral Jevan Bima from Edelweiss Tokio Life Insurance
- It offers a life cover by protecting your family’s financial future. It also compensates for death due to COVID-19.
- It is a flexible policy with the option to choose the term between 5 to 40 years and cover between ₹5 lakhs and ₹25 lakhs
- There are three premium paying options: regular, limited, and single pay.
- It comes with three payment modes: monthly, half-yearly, and yearly
- You can get tax benefits on premium paid as well as on the sum assured
Term insurance plans come with a host of benefits, and the most important one is securing the financial future of your family. As they are highly affordable, they make for a wise investment decision.
Aastha Mestry - Portfolio Manager
An Author and a Full-Time Portfolio Manager, Aastha has 6 years of experience working in the Insurance Industry with businesses globally. With a profound interest in traveling, Aastha also loves to blog in her free time.