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Death, Term Insurance and Taxes

IndianMoney.com Research Team | Updated On Tuesday, August 13,2019, 06:33 PM

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Death, Term Insurance and Taxes

 

 

Death, Term Insurance and Taxes

Just as death and taxes are an inevitable part of life, a term insurance plan is also a must. A term life plan helps secure finances on an untimely demise; stay prepped for future eventualities as well as save on taxes.

You can avail various riders on term insurance plan like accidental death, total or permanent disability or critical illness rider, and enhance cover.

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See Also: Who Wants Term Insurance?

Death, Term Insurance and Taxes

What is term life plan?

A term life insurance policy is a type of life cover; customized to meet the financial needs of the dependents; in case the insured dies within the policy term. The sum assured is paid to the nominees of the policyholder. The term life plan helps remain stress free as you have already secured the financial future of your dependents. It helps you plan financial future more efficiently and ensure safety and protection to family members.

What is the importance of term insurance plan?

The significance of term life insurance plan is felt when the sole breadwinner of the family is absent. Term insurance policy helps take care of your liabilities and responsibilities when you are not around. Even if you have sufficient assets, a term insurance is still a must have policy.

Selling assets like real estate or land is time consuming. A term life insurance is the best way to support your family; on an untimely demise. It helps the nominee get a lump sum amount in the form of death benefit; whenever the claim is initiated. A verification takes place and the claims are settled within a month.

Term insurance plans are especially important for sole breadwinners, newly married couples and people who commute daily to work as it provides financial support to your family in case something happens to you.

A family bereft of term insurance may find themselves in serious financial trouble; in case they lose the sole earning member of the family. Thinking of finances at the time of emotional distress; can be an added burden on your dependents. The death benefit will help your family members take care of routine monthly expenses, pay off loans and secure your dependents.

Listed below are some of the benefits of the term insurance plan:

Flexibility:

In case you want to discontinue your term insurance at some point in life; you only need to stop paying your insurance premium. Do remember, term life plans have no survival benefits. You can also avail a term insurance cover after your retirement; in case you have liabilities at this age.

Simplicity:

The term insurance policies do not involve complex terms and are very easy to comprehend unlike endowment plans; which are a mix of insurance and savings.

Tax benefits:

You can enjoy tax benefits with term life plan under Section 80C of the Income Tax Act. A term life plan also offers a tax-free death benefit which means the death benefits are fully tax-exempt.

 Affordable premiums:

The term insurance is the most budget-friendly life insurance policy. The term insurance conveniently fits your budget and helps avail higher insurance cover for a nominal premium. You can avail a term insurance of Rs. 1 crore for a monthly premium of Rs 500 a month.

See Also: Why Term Insurance Is Crucial To Your Life and Family?

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IndianMoney.com Research Team

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