A term plan is the safest way of arranging financial safety when you are no longer present to provide for your loved ones. In a term insurance plan, a fixed amount i.e. a sum assured is given to the nominee in case of death of the policyholder during the policy term. You are insured for a fixed time frame and no monetary benefits will be given if you survive the policy duration.
Key Benefits of a Term Plan:
- Large Life Cover:
A term insurance plan is decided on your income so that your dependents have enough support when you won’t be around to provide for them. More the income, larger the life cover would be. For a person who has a yearly income 5 lakh p.a. is eligible to get a life cover up to Rs.1cr. Once you are settled in life, have a good paying job, and planning to start a family, it is a great time to opt for a term plan to ensure that your loved ones don’t run into any financial problems.
- Reasonable Premium:
Term plans are pure protection plans which only provides a death benefit. Since it’s not an investment plan, the premium for a term plan is reasonably low. Every person who contributes to the family income should have a term plan because it gives a sense of relief that your dependants will be financially secured in your absence. Not purchasing a term plan is a penny wise, pound foolish decision.
- Paying Off Debts:
After you, your family shouldn’t be burdened with heavy debts. The sum assured your nominee will receive in a term plan ensures that your family can live with dignity after clearing your debts like auto loans, home loan, EMIs, etc. It helps in repayment of all such debts and future payments that you left behind.
- Major Responsibilities:
In case of a sudden accidental death, you may not be able to fulfill your major responsibilities. With a term plan, your child wouldn’t be deprived of funds to go the best university or cut short on a grand wedding. When we start a family, we make a promise to ourselves that we will always put our family first, no matter what. We keep this promise until we die. And in your absence, your trusted insurer keeps the promise intact.
- Tax Benefits:
Under Section 80(C) insurance premium is currently exempt up to Rs. 1,50,000. Also, when the sum assured is received by the family, there is a tax relief under Section 10(D) of the Income Tax Act. This dual relief is a cherry on the cake.
Suffice it to say, a term plan is a must have for every individual!