Life is uncertain. Inflation is unavoidable. This is the reason why term life insurance is considered to be the best option to battle uncertainty. Term insurance looks after dependents financially, on an untimely demise.
Term insurance is an agreement between the insurer and the insured; wherein the insurer agrees to pay a fixed sum to the beneficial nominee/nominee; if the insured dies within the policy tenure. There are no survival benefits.
Want to know more on Term Insurance? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
If you are the sole breadwinner of the family, term insurance is mandatory. It helps your family meet household expenses on the sudden demise of the breadwinner.
Let’s consider the case of Mr Santosh who had availed a term insurance policy. He passed away in a road accident two months ago. His wife received a lump sum of Rs 50 Lakh from the insurance company as a death benefit. She uses the death benefit to meet daily expenses and for children’s education.
Let’s hear the story of Sharmila who lost her husband, Ramesh, 4 months ago. Mr Ramesh died of a massive heart attack. Fortunately, he had term life insurance. She got a sum of Rs 1 Crore from the insurance company. Sharmila manages daily expenses and has repaid the home loan with the death benefits. Her children enjoy quality education at a good school.
You get a tax benefit on premiums paid on term life insurance under Section 80C up to Rs 1.5 Lakhs a year. Death benefits are tax-free under Section 10(10D) of the Income Tax Act.
See Also: Health Insurance for Parents
What are riders? Riders are add-on benefits offered with term life plans. Types of riders include accidental death, critical illness, waiver of premium, income benefit and partial and permanent disability riders.
For example, the critical illness rider offered by Aegon Life Insurance Company, gives 100% of the rider sum assured if the policyholder is diagnosed with cancer (except for skin cancer), heart attack, major organ transplant, stroke, coronary artery bypass graft, paralysis and others.
The disability rider offered by the same company gives 100% of the sum assured if the insured loses both limbs and eyesight in an accident. If the insured loses one limb, then the policy pays 50% of the sum assured.
Each rider has its own benefits and applications. Understand and use them wisely. For example, when you choose the income benefit rider, your family gets an extra income per year in addition to the regular sum assured. Similarly, when you choose the waiver of premium rider, the company waives off all future premiums, if you are not able to pay premiums. When you include the accidental death benefit rider, the dependents enjoy a higher sum assured if policyholder dies in accident. Choose only riders you need, else, you incur an unnecessary cost.
See Also: 4 Insurance Plans You Must Have
You May Also Watch
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on Indianmoney.com review and complaint portal IamCheated.com.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.