When you think of buying something new, there is always a mental checklist that you go through. Whether it is a new appliance for your house or a new investment, the rules are along the same lines. You ask yourself a few important questions to determine its suitability and value for you and your family.
Similarly, when you are looking to secure your family’s future financially, multiple options are available. Among these, you might find term insurance to be the most cost-effective way to have high coverage for your family. A term insurance policy allows the customer to change or customize policy features and benefits to meet their specific needs.
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In case of an unfortunate event, term insurance will help your dependents have the financial support they need to replace the income source. Other than this, multiple benefits of term insurance can make your life a little easier.
Here are some of the things that you can expect from your term insurance policy:
Eases Your Financial Stress
In your absence, the right term insurance policy will help you plan for your family's future. It makes life easier for your family by first settling claims promptly and then giving you the option of converting a portion of the total amount guaranteed into monthly income for the nominee.
Typically, a regular term insurance plan pays the nominee of the policy a lump-sum amount in case of the insured individual’s demise. The financial support from the death benefit can work as a shock absorber for the setback when an income source is lost. It can help the family members manage their finances to ensure a steady income.
Safety Net for Loved Ones
Having a term insurance policy keeps you assured that your family will remain financially independent under unprecedented circumstances. It is a safety net that can be established early in life to keep their future stable and secure.
In case of an unfortunate incident, the nominee may provide sufficient financial protection for the rest of the family with a term insurance policy. The family will continue to run the household and cover significant expenses such as a children's education or repayment of loans.
Fits Into Your Budget
Once you know what is life insurance value for you and your family, you can invest in the right instruments. Term insurance is known to be one of the most affordable and uncomplicated financial tools to exist. You can get long-term protection for your family at minimal premium rates.
For instance, if you are 30 years old and wish to buy term insurance that keeps you covered for the next thirty years, you could pay as little as Rs. 779 per month or Rs. 8,850 on an annual basis for a cover amount of Rs. 1 crore.
Flexibility of the Plan
With a term insurance policy, you can choose the sum assured, the policy period, premium payment frequency and other variables as per your financial requirements. Some term insurance plans come with increasing life cover, allowing policyholders to keep their cover adequate as they move through different life stages.
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Cover for Spouse
The financial contribution of an earning member to the family is obvious. The non-earning partner, on the other hand, makes a significant contribution to the household.
As a result, the best term insurance policies protect both the earning and non-earning members of the family. When you explore different plans, you may find some that offer ‘joint cover’ to the policyholder.
The term ‘joint cover’ denotes that both partners are the owners of the policy. If one of the partners suffers an untimely demise, the family will not be financially harmed. In other words, a long term life policy provides coverage for the homemaker as well.
Chance to Customize
Insurance providers offer certain riders as add-ons to your base insurance policy so that you can create a more comprehensive protection plan for your family. You can add riders with critical illness coverage, accidental coverage, waiver of premium and more benefits to your policy for a nominal premium.
These extra benefits assist your family even though you are diagnosed with a life-threatening illness such as cancer or a heart attack. The most difficult aspect of being disabled or suffering from a critical illness is that your income may cease as your expenses mount. Such riders can strengthen your term insurance considerably and give you a sense of security against the uncertainty of life.
Under Section 80 C of the Income Tax Act, 1961, the premium paid for term insurance is eligible for a tax benefit of Rs 1.5 lakhs in a year, provided that the annual premiums for the policy do not exceed 10% of the sum assured. The death benefit of the term insurance is exempted from tax altogether under Section 10(10D) of the IT Act.
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