Term insurance is a type of life insurance that provides financial protection in the case of the policyholder’s demise. It is a life insurance that offers financial protection and coverage to the policy beneficiary if the insured dies during the active period of the term insurance policy. Basically, a term policy gives complete financial stability and protection to the insured's loved ones in the event of unforeseen circumstances. In the case that the insured passes away during the period of the insurance policy, the sum assured is paid to the insured's policy nominee as a death benefit as per the terms and conditions of the policy.
A term insurance policy not only provides financial security and protection to the insured individual's family but also assist them in meeting their future needs, such as their children's education and marriage and other things. Some insurance companies also provide permanent or partial disability coverage, which prevents the policyholder's permanent income from being disrupted.
Term life insurance policy offers the highest life coverage and term insurance tax benefits at the lowest premium rates for the duration of the policy.
Before purchasing a term policy, it is critical to understand the benefits and major aspects of term insurance. A term life insurance policy provides life insurance coverage against the fixed sum of premium paid over a specified policy period.
People of all ages understand the necessity of purchasing the ideal term life insurance coverage for their needs. In today's fast-paced world, every family needs financial security under a term policy to deal with the financial burden of losing a loved one, especially the breadwinner.
It also aids the family in repaying debts such as vehicle and home loans, if any exist.
Here are a few reasons why term insurance is a good investment :
An unfortunate incident such as the untimely death of a family member can be extremely upsetting, especially if the family is financially dependent on the individual. Investing in a term policy relieves financial stress and uncertainty while also meeting the family's financial needs.
Financial dependents may be required to sell assets in order to cover daily expenses if the principal income earner is absent. Financial dependents, for example, may be forced to sell their home or investment holdings to raise finances. This could have a long-term harmful influence on their well-being. Instead, a term insurance policy's death benefit can provide significant sums to cover everyday expenses or for any other reason. As a result, assets with significant long-term worth do not need to be liquidated.
Life's uncertainties have the power to make or break us in unimaginable ways. When watching the present global coronavirus pandemic, this is easy to understand. A term policy's main benefit is that it keeps us prepared for such circumstances. By choosing the term insurance policy, you can get a substantial life insurance policy for a reasonable price.
Majorly each term insurance policy has lower premium rates than other types of life insurance, making them affordable to everybody. A term insurance policy's coverage is extensive with a reasonably priced premium. As a result, such a policy forms the basis of one's financial portfolio because it provides exceptional protection.
A person can ensure that their family members enjoy a well-maintained life with a high standard of living even if they are not present by using the term policy. Term insurance are designed to aid in long-term financial planning.
Term insurance plans can be armed with multiple riders. These riders are quite valuable and can supplement a term insurance policy by providing additional protection. Some riders include expedited death benefit rider, accidental death benefit rider, critical illness rider, waiver of premium rider, etc.
A term insurance policy is beneficial to everyone having a family. It is more of a requirement for some than for others. Term insurance has some of the lowest premiums compared to other types of insurance coverage. It can be used as a financial support system for people who have a limited budget and income. People with modest incomes will be unable to save the necessary funds in the case of unforeseen circumstances.
Purchasing a term insurance policy could be quite beneficial to these individuals and their families.
Premiums paid for life insurance are deducted from taxable income under Section 80C, providing a two-fold advantage to taxpayers: protection and tax savings. In addition, section 10 (10D) of the Income Tax Act of 1961 exempts the sum assured as per the terms and conditions of the policy (death benefit) received under a term insurance policy from taxation.
As a result, everyone who benefits from any of the three major advantages of term insurance should consider purchasing one. These three major advantages are life insurance, tax savings, and low premiums.
In most cases, parents are their children's only source of financial support. Children's requirements range from school fees and living expenses to large university tuition bills later in life. An adverse situation involving a parent might put their future in jeopardy and compromise the life prospects of their children. By acquiring a term insurance policy, parents can ensure that this scenario does not occur.
The majority of people opt to buy term insurance after they get married or later in their careers. Those who have recently begun working, on the other hand, will greatly benefit from getting term insurance. Parents or siblings are likely to be financial dependents on such people. Purchasing term insurance at such an early stage in one's career has several advantages.
Let's have a look at some of these advantages :
Today's women are equally responsible to manage their household finances and provide for their families. A family's income is now as reliant on the woman as it is on the man. This dependence necessitates providing financial security to your loved ones in the event of your death. Even if you are not present, a Term Insurance policy ensures that your parents, spouse, and children are financially secure. It ensures that your family's lifestyle is not jeopardised and that they may achieve the objectives you set for them. The term insurance cover amount also aids in the repayment of any outstanding liabilities such as home loans, auto loans, education loans, and other similar debts.
There are over 1.5 crore regular income taxpayers, in the country. Taxpayers are constantly on the hunt for tools that can provide them with favourable tax benefits. A term insurance policy can provide tax benefits to policyholders in addition to protecting one's financial dependents from financial difficulties. Policyholders can claim a tax deduction on their term insurance premiums paid under Section 80C.
Self-employed people make up a large portion of India's workforce. And there can be numerous ups and downs of self-employment as it takes a long time to build a successful business or independent practice. As a result, a self-employed person's income is likely to be inconsistent. Hence, one of the primary concerns of a self-employed person is the well-being of financial dependents. A self-employed professional can ensure that the objectives of financial dependents are never jeopardised by buying a term insurance policy.
Term insurance policies are a good place to start when it comes to building a strong financial portfolio for newlywed couples. Both spouses may have financial responsibilities and may want to leverage the benefits of buying term insurance as soon as possible. In addition, when a child is born later, the term insurance plan might make the child the only joint beneficiary.
It may not seem sensible to buy a term insurance policy during one's retirement years because one's responsibilities are likely to be completed. However, financial dependents, such as a non-working spouse or child, may still exist. You could also want to leave a sizable fortune to your children or grandkids. Term insurance premiums are also tax-free, subject to the conditions outlined in section 10 (10D) of the Income Tax Act of 1961.