The term insurance plan is a type of life insurance plan; which covers the policyholder for a fixed term. The insurer agrees to pay a death benefit to the nominees; in case the insured dies within the policy tenure. If death is due to suicide within a year of availing the plan or if the nominee was involved in the murder of the policyholder; the insurer would not settle the claim. Term plans are pure risk protection plans. They take care of your family financially, on death of policyholder within the term of the plan.
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Death of the breadwinner can lead to financial distress. The dependents have to bear the financial burden, along with the emotional grief.
The term life insurance plan; plays a major role in covering the risk factor. Term plans are affordable plans and ensure a financial safety net for dependents. Term Life insurance easily fits your budget without being a burden and also saves taxes. Premiums paid on term life plans enjoy tax benefits under Section 80C of the Income Tax Act.
The death benefits are only paid if the insured dies within the policy term. This plan has no survival benefits.
Ideally, all working people should buy a term insurance plan with partial and permanent disability rider; to protect against partial or total disability in an accident. However, term insurance must be availed by people who are the sole earning members of the family. Nevertheless, the below-mentioned categories must buy a term insurance policy:
People with Dependent Parents: Buying a life insurance for people with dependent parents is of utmost importance; especially if your parents are financially dependent on you. People with aged parents must avail term insurance to safeguard the dependents. You can avail term insurance with a nominal premium to take care of financial needs in your absence.
See Also: How to Choose the Best Term Insurance?
Newly Married Couple: A Term insurance plan can work as a safety net to protect your spouse in case of early demise. Term plans must be bought by newly married people to secure the lives of spouse and help her lead an independent life; when you are not around.
People with Dependent Kids: A parent who is a sole earning member of the family can purchase term insurance to ensure kids do not face financial difficulty on an untimely demise.
A term life plan helps children enjoy quality education; even on death of the breadwinner. A term plan offers a death benefit, providing an avenue to continue education; in case of any eventuality.
People with Young Kids Due to Late Marriages: Nowadays; people often marry late; due to various reasons like family responsibilities, professional commitments, pursuing higher education and so on.
See Also: How Much Term Insurance Should I Buy?
Late marriages often result in kids later in life. In such a scenario, your kids are still young, pursuing education and are dependent on you; financially. Therefore, you can avail term insurance to secure the future of your dependent kids. You can continue your term insurance plan till the time your kids enter the professional World and are no longer dependent on you.
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