Is a Term Insurance Plan Suitable for You?

Term insurance is a popular life insurance product that provides policy buyers with extensive financial coverage over a pre-defined period. Such an insurance plan accompanies the perks of life cover and financial security. To elaborate, in case the insured dies during the policy term the insurance company will pay the death benefit to the policy nominee. Meanwhile, some insurance plans may allow the insured to mobilize their savings and build a corpus for the future. However, individuals can benefit from such perks based on their choice of term insurance plan. As an intending term insurance policy buyer, it is a must to check the accompanying features and find out whether such a policy is suitable for your needs.

On that note, let us read more about term insurance plan to understand how to gauge the suitability of a term insurance plan.

Who Can Purchase a Term Insurance Plan?

Notably, most term insurance plans are available to individuals between the age of 18 and 65, with the maximum maturity age being 85 years. The policy term of most policies ranges from 5 to 50 years, whereas, the accompanying sum assured ranges from Rs. 20 lakhs to over Rs. 1 crore. Since most term insurance plans have simple eligibility requirements, individuals can easily avail of a policy that suits their needs the most. However, one should note that the set eligibility requirement may vary among term insurance policies or insurance providers, hence, checking them beforehand would simplify the hunt for an ideal term insurance policy significantly.

Do You Need a Term Insurance Policy?

Without a doubt, a term insurance policy is among the most effective ways to ensure the financial security of one’s family members who are not financially independent. A term insurance plan is known to offer a substantial financial life cover against a minimal premium amount, making it a cost-effective option to safeguard the family’s future. This help’s the dependants to face unforeseen events and account for financial liabilities with ease in the absence of the insured.

In case you are the sole breadwinner of the family and wish to safeguard the financial future of your loved one you should consider getting a term insurance policy.

Here are a few reasons to consider a term insurance policy, if you haven’t taken one yet –

The term insurance death benefit offered by the insurance company can help your family cope with the financial liability in your absence. The money will also help them to cater to their monthly expenses and loan EMIs and account for future requirements such as education charges or marriage.

If you decide to purchase a house or a car on a loan, the repayment burden of the same may fall upon your family members in case of your untimely demise. Since car loans and home loans often accompany a long repayment tenure and large EMIs, it could put an extra burden on the vulnerable financial standing of your family members in your absence.  In case of non-repayment, the lender can also take away the car or the property in question. Having a term insurance plan can help secure your loved ones from such risk and help them pay off the debt without straining their savings.

Key Perks of Getting a Term Insurance Policy

Term insurance policies offer several benefits to the policy buyer, making it a go-to option for many individuals. Some of the most popular perks of a term insurance plan include –

  • High coverage: Leading term insurance plans offer substantial coverage, which helps useful in accounting for financial liabilities in case of the untimely death of the insured.
  • Low premium: The policy premium of term insurance plans is lower than a regular life insurance policy. The cheaper premium amount makes it relatively affordable for the insurance buyer. Individuals can use a term life insurance calculator to find out their premium burden and determine whether they can afford the same.
  • Disability protection: Some leading term insurance plans also offer insurance buyers total or partial financial protection against disability. In other words, such plans offer financial aid to the insured in case they are met with an unfortunate incident that leaves them partially or totally disabled. Such a cover helps meet the treatment cost and supports the family to manage their financial liability arising due to the incident.
  • Rider benefits: Term insurance policies also come with rider benefits. Riders add benefits that a policyholder can add to their existing policy to increase their coverage against specific situations such as critical illness or accidental death. Such a feature helps individuals to personalize their cover.
  • Tax benefits: Policyholders are entitled to tax deductions under Section 80C of the Income Tax Act. Even the sum assured that the beneficiary of the policy receives in case of an unforeseen event is eligible for tax benefits.
  • Premium waiver: Under certain cases, the policyholder can also get their future premiums waived. For instance, if the insured was in an accident and has become a victim of disability, he/she can request for waiver of premiums. However, such a benefit is usually available only if all previous premiums have been cleared.

Besides these leading insurance companies also allow individuals to select a suitable premium payment option.  They can choose to pay a premium monthly, quarterly, annually, or half-yearly, based on their financial standing and convenience.

Who Should Consider Getting a Term Insurance Policy?

Individuals who are responsible to provide for their family members including parents, spouses, or kids, should consider purchasing a term insurance policy. Having such an insurance plan will allow the insured to safeguard the financial future of their loved one in the event of his/her sudden death or disability.

That said, these people should get a term insurance policy –

  • Newly married individuals should consider getting a term insurance policy to safeguard the financial future of their spouse.
  • Parents who wish to secure the future of their children by giving them the best quality education can benefit by getting a term insurance plan. Such a policy will ensure the kid can still receive quality education even in the absence of their parent.
  • Taxpayers can save on taxes by getting a term policy.  Typically, the insurance premium of the policy is entitled to tax deduction under Section 80C. Additionally, the maturity amount is entirely exempted from taxes under Section 10(10D) of the Income Tax Act.

However, it is recommended to purchase term insurance early in age. This is because the premium amount depends on the policy buyer’s age and health conditions. In other words, the younger you are the more likely you are to get a term insurance plan at an affordable premium.

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