How Purchasing a Term Insurance Plan Will Secure Your Family?

Term insurance plans are becoming increasingly popular nowadays. These term plans are the most straightforward type of life insurance, protecting the family for a set time if the policyholder dies. Term plans can last anywhere from 5 to 40 years, or even longer, depending on the policyholder's age and the insurance provider. Before their issuance, they normally require a medical examination to allow insurance firms to analyse the risk they are taking on with each policyholder regarding any pre-existing medical conditions and their overall lifestyle. Compared to standard life insurance plans, term insurance typically needs lower premium payments while providing equivalent or more coverage. Read on to find out how a term plan can secure your family even after your demise.

How Purchasing a Term Insurance Plan Will Secure Your Family?

The benefits of term insurance plans are given below.

1. Financial Protection

Term plans ensure the future of the policyholder's family by providing death payments in the case of the policyholder's death. In such cases, they protect dependents such as the policyholder's spouse, children, or elderly parents from having to shoulder the financial liabilities of the deceased. This incentive is especially important for newlyweds or new parents, as well as businessmen who have significant debts or other financial obligations. Payments can be made regularly or in one lump sum after making a claim. These death benefits can be used by the deceased's family to support their everyday necessities as well as to fund future endeavours like a child's education.

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2. Additional Coverage

Policyholders may be able to get coverage for additional risks such as genetic or essential illnesses, as well as accidental disabilities, by paying a small amount in addition to the monthly premium. This way, your troubled family will not suffer from a financial strain due to high treatment costs and expenses. They may also offer top-ups to increase policy coverage at key life events such as marriage, motherhood, and so on.

3. Tax Benefits

Under Section 80C of the Income Tax Act of 1961, premiums paid on term plans are tax-deductible up to a ceiling of Rs. 1.5 Lakh per year. In some situations, death benefits are also totally tax-deductible under Section 10D, albeit this varies depending on a variety of conditions. The money saved can be further invested in other investment avenues to build a strong portfolio and generate wealth.

4. Flexibility

In circumstances where the policyholder has taken on debt in some form, such as loans, some term plans may allow the degree of coverage to decrease over time. As debts are gradually repaid throughout this time period, the coverage reduces. Alternatively, term insurance policies may boost payout amounts to adjust for inflation or repay premiums paid as a maturity benefit at the end of the term. Hence, you can choose a suitable alternative to meet your family’s future needs and ambitions.

Take Away

To get the most out of term plans, you must choose a policy that meets your long-term needs. You can ensure that you account for liabilities such as existing debt when determining the amount of coverage you need since this will help your family avoid financial hardships in the event of your death. It's preferable to go with a coverage amount that's at least 15-20 times your annual household expenses. It's also crucial to include your age when applying for the policy and calculating the number of years you'll be expected to stay in the job. Furthermore, getting term insurance will be easier while you are younger because insurance providers would likely view you as a lower-risk investment when compared to older policyholders. It may also be less expensive to buy insurance coverage online because brokerage fees are often waived.

Also Read: Benefits Of Purchasing A Life Insurance Policy With High Sum Assured

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.