Why Term Insurance is a Must in Your Financial Planning?

Life is unpredictable, and you cannot foresee what the future holds for you. Therefore, it is essential to secure the financial well-being of your family if you are not there to take care of them due to a tragic incident. Doing this allows your family to live a financially independent life and have peace of mind. The big question here is, are your savings and investments sufficient to meet your family’s financial goals? To ensure that your family is financially protected, especially when you are not around, it is wise to include a term life insurance plan in your financial portfolio.

What is term insurance?

Term insurance is the simplest form of life insurance, which is extremely popular, as it offers high life cover at an affordable rate. It provides life cover for a specific period. If anything untoward happens with you within the policy term, the insurer hands over the death benefit to the nominee. Your age, lifestyle habits, the sum assured, and medical conditions can influence the term plan premiums. There are numerous term insurance plans in India. Therefore, it is advisable to select a plan that offers the best coverage at a competitive price. Besides this, ascertain whether the term plan can meet the financial goals of your family.

Why should you include term insurance in your financial portfolio?

Here are some of the benefits of investing in a term insurance plan:

  • Financial security

One of the significant advantages of including a term plan in your financial portfolio is that it offers a high sum assured that you could safeguard your family’s economic needs when you are not around. Therefore, term insurance has become the most preferred investment option as you can provide financial stability to your family at an economical cost.

  • Pocket-friendly premiums 

Compared to traditional life insurance policies, the premium of a life insurance term plan is quite nominal. For instance, the premium is anywhere between INR 15,000 to INR 20,000 per annum for a policyholder in the early 30s. The cost-effective premium and the high sum assured make a term plan an ideal investment alternative.

  • Tax deductions

Term insurance tax benefit is one of the reasons why people like to invest in this insurance policy. Here, the policy’s premium is exempted from tax under Section 80C of the Income Tax Act, 1961. The maximum permissible limit of deductions is capped at INR 1.5 lakh per annum. Moreover, the death benefit that the nominees receive is tax-free according to Section 10(10D) of the Act.

  • Convenient to purchase 

The advent of technology has allowed us to buy products and make payments from the comforts of our home. Similarly, you can buy term insurance plans online. As there are numerous term insurance plans in India, it becomes easier for you to compare various plans along with their features and benefits.

This makes it simpler to select the ideal plan as per your needs. Apart from this, purchasing the policy online is way cheaper than buying it through an insurance agent. The insurer is directly dealing with you, which therefore eliminates the cost associated with agents.

  • Enhanced coverage through riders

You can also purchase riders over and above your term insurance plan. Such riders broaden the scope of the policy and offer numerous benefits. You can opt from an accidental death rider, an accidental disability rider, a critical illness rider, a terminal illness rider, and a waiver of premium rider, among others based on your requirements. Purchasing a rider will make your term plan premium a bit costly, but it is worth every penny.

Now, when you know how beneficial a term insurance plan can be, it is recommended to invest in an appropriate policy as per your family’s monetary requirements and aspirations.