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Home Articles Why Term Insurance Is Crucial To Your Life and Family?

Why Term Insurance Is Crucial To Your Life and Family?

IndianMoney.com Research Team | Posted On Tuesday, August 06,2019, 06:10 PM

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Why Term Insurance Is Crucial To Your Life and Family?

 

 

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.

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Why Term Insurance is Crucial to Your Life and Family?

Term Insurance is Mandatory for the Sole Breadwinner

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.

See Also:  How Health Insurance is Important for Your Family?

Financial Future of the Family is Secure with Term Insurance

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.

Tax Benefits

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

Life is Easy with Term Insurance Riders

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.

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