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Term Insurance is the Key to Secure Your Family's Future

IndianMoney.com Research Team | Posted On Monday, August 05,2019, 02:58 PM

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Term Insurance is the Key to Secure Your Family's Future

 

 

Life is uncertain. To get rid of this anxiety and live a stress-free life; you must opt for pure risk cover in the form of term life insurance. This helps provide financial security to dependents; when you are not around. Availing life insurance helps enjoy peace of mind as it offers financial backing to dependents; in case of any eventuality. It helps compensate for the loss of income; due to the death of the sole breadwinner of the family, within policy term.

Term insurance is a must to ensure the financial well-being of loved ones. These plans offer a death benefit on demise of the policyholder, within the term of the plan. The nominee would receive the death benefit.

The payout from term insurance can be used to meet daily needs and repay loans. The policyholder can also avail an income replacement term insurance plan; to help the family receive a monthly income; instead of a one-time lump sum

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Term Insurance is the Key to Secure Your Family’s Future

What is Term Insurance?

Term insurance is a life insurance plan, which covers risk. (It’s pure risk cover) You pay a premium to keep the term life plan in force. On death of the policyholder within the term of the plan, the nominees enjoy the sum assured also called death benefit. This plan offers no survival benefits. It also covers treatment of critical illness; if the insured has opted for critical illness rider.

Benefits of Term Insurance:

Financial Liberty: The nominee as mentioned in the policy documents would receive the sum assured; if the insured dies within the policy tenure. This money would be used by the nominees, to meet daily needs and settle financial obligations and loans.

See Also: Why a Term Life Insurance Policy is a must?

Death benefits would be used for important life events like funding children’s higher education, children’s marriage and so on.  Payouts would be either lump sum or staggered payments.

The insured can opt for a basic term life policy with lump sum payment option or can modify his policy with hybrid components of monthly income and lump sum payment. The payment option can be selected based on the convenience and the financial needs of the family of the insured.

Affordable Premiums: The premium charged for a term insurance plan is very reasonable. Depending on your requirements, you can choose the sum assured as the premium amount depends on the sum assured you opt for.  If you are stepping back from selecting a higher sum assured in fear of unaffordable premium rates, then relax.

Term insurance is the most affordable form of life insurance available in the market today. Nowadays, most of the insurance companies are offering term insurance online, resulting in a high sum assured at affordable premiums. No other life insurance plan can be availed at such low premiums.

See Also: What is a Term Life Insurance Policy?

Tax Benefits: The premiums paid on the term life insurance policy are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961. A maximum deduction of Rs 1.5 Lakh can be availed in a financial year. The death benefit is fully exempted from tax under Section 10(10D) of the Income Tax Act, 1961.

Coverage for Life Risks: The term life insurance policy is a must-have insurance plan for people who are newly married or for parents and breadwinners of the family. Businessmen and other professionals who have huge liabilities or considerable debt; must also purchase a term life plan to pay off debts in case of untimely demise.

A term insurance plan shields the dependents and saves them from financial distress in case they lose the main earning member in the family. Term insurance helps cover life risk and proves to be a lifesaver for the dependents of the family; in the absence of the insured.

What is Your Ideal Cover?

Avail term life insurance of at least 15-20 times annual income. Term insurance of a crore or more; helps loved ones cover expenses in case of loss of income and maintain current lifestyle.

Term insurance compensates on the demise of the sole earning member of the family, within the term. You must keep in mind existing loans and liabilities, while choosing the sum assured. Your family would struggle with loans and daily expenses; if you chose term insurance with lower sum assured. Therefore, you need to ensure sufficient coverage to help your family manage liabilities as well as secure financial future.

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

The Dilemma While Purchasing Term Insurance:

Many citizens are hesitant to avail term life plans, as it doesn’t offer survival benefits. This generally happens because people lack awareness on term insurance policies. This is the only insurance product that shields the family and offers financial protection of a considerable amount on death of the breadwinner.

Solution:

Avail maximum sum assured at affordable premiums. Due to inflation, lifestyle expenses are on the rise. So, losing an earning member can severely impact family finances. The earning member needs to save a substantial amount; to secure family’s financial future. However, in case the policyholder dies before he is able to save up the corpus; then the family is devastated, financially.

To avoid such a scenario, the policyholders must renew the term insurance plan and also avail substantial cover to keep up with inflation. The term insurance promises to pay a lump sum amount on death of the insured; within the policy tenure.

For people who are still unsure on whether to opt for a term life plan, do realize, its pure risk protection. You also have term plans with return of premium. However, these policies may involve some specific terms and conditions. You must read the policy documents carefully, before availing the term life insurance plan.

See Also: Term Insurance For Indians

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