7 Reasons Term Insurance is a Must-Have Today : Planning your future is one of the most important things that you can do to ensure you and your family are financially stable throughout your life. It will help you prepare for uncertain situations that can disrupt your life.
If a person is healthy, he can protect himself and his family one way or the other and if he is the sole bread earner of the family, it is always at the back of his mind that he should be prepared to leave a safe net for his family to fall back on if the day comes that he is not available anymore. The adage “health is wealth” is undoubtedly true.
A term life insurance policy can be subscribed to at an exceptionally low premium cost. The pay-outs can be customised as per your needs, whether it be a lump sum pay-out or divided monthly. It is further beneficial as the premium you pay towards it is exempted from Income Tax as well. Here are some reasons why you should consider adding a term life insurance policy in your investment portfolio:
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Competitive Pricing
When it comes to term insurance policies, they are easily comparable, primarily on the basis of price. In terms of their structure and operation, term insurance policies are essentially similar, which allows one to compare between different policies with greater ease. This simple basis of distinguishing policies, along with the ease of understanding, has led to the competitive pricing of term insurance policies, which are fast attaining the status of a commodity. There are far lesser issues in terms of information for term policies, which has further helped in the competitive pricing of these policies.
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Simple To Understand
While other insurance plans such as endowment policies may be a little complicated to understand, term life insurance plans are far simpler to comprehend. While there are several aspects involved in insurance plans such as the saving component, calculation of risk, size of cash value savings, death benefit, policy loan repayments, etc. As compared to all this, term life insurance is remarkably simple as it only asks you the term for which you wish to be covered.
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Flexibility
As compared to a cash value policy, it is easier to opt out of a term life insurance policy. It is quite simple for term policies where once the insured stops the payment of premium, the risk cover provided by the policy also ceases and the policy is no longer applicable. Considering that there is no savings component in term insurance policies, you will not receive any pay-out. On the other hand, under cash value policies, you will only receive the complete promised survival benefit if you have continued the policy till it reached the end of its term. If you have ceased the premium payment of your cash value policy before the end of its term, it will be a greater loss since you will not be able to recover the savings you have earned under the policy without deductions.
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Affordable Coverage
Premium for a term life insurance policy is considerably lower than those charged by cash value policies. Not only are term insurance plans simple to understand, but they are also one of the most affordable plans which offer premium returns. For instance, a 30 year old individual can currently purchase a term insurance policy for a duration of 20 years for a sum assured amount of Rs 10 lakh by making an annual premium payment of Rs 3000.
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Tax Benefit
Like several other insurance plans, term insurance plans also offer tax related benefits on the death benefit which is payable to the nominees appointed by the insured. Premium payments made under term insurance policies are eligible for tax benefits under Section 80C of the Income Tax Act.
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Additional Benefits
Most life insurance policies offer living benefits, in addition to the Death Benefit. Generally available in the form of a rider, living benefits have considerable weightage on the returns paid by term life insurance policies.
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Easy Access to Information & Quotes
With the term insurance sector going increasingly competitive, more and more players are entering the industry with affordable plans. This has helped make information regarding term insurance easily available to individuals with greater ease. Also, many insurance providers are providing prospective policy takers with quotes in term insurance plans to encourage them to make a purchase.
Considering these benefits of term insurance and the increasing need for financial security in the current economy, it is a wise idea to identify your needs and invest in the best term plan that suits them.
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