Here’s How Term Insurance Benefits Can Help Protect Your Loved Ones
Term insurance is a great investment policy to provide financial cover to your family or dependents after you’re no longer around them. In today’s time, it’s considered to be one of the most important financial choices of life that should be made as early as possible.
Moreover, in addition to financial protection for your family amidst the unfortunate event of your death, this insurance policy also helps you avail of several tax benefits as stated in the Income Tax Act of India established in 1960.
There are several other term insurance benefits as well that you can avail yourself of with a term plan. Let’s take a look at some of the major advantages offered by this investment scheme that allows you to make the future financially secure for your family and loved ones:
Multiple Death Benefit Payouts
If you have liabilities like paying the installments of your car or any personal loan that you’ve borrowed from a financial institution, then it may feel like an unexpected burden to your family in your absence, especially when they’re going through the toughest times of their life.
That’s where the various term insurance benefits come into play. After your unfortunate demise, your dependents will receive a lump sum amount that will allow them to progress through their life and keep paying off the financial liabilities.
Several providers also allow you to gain a monthly income consistently in addition to the amount assured upon the death of the policyholder. Using this monthly income, your family will find it easier to manage day-to-day expenses without depending on anyone for it.
Affordable Premiums with High Payout
Being one of the simplest types of life insurance policies, term insurance is very affordable as compared to other plans available in the market. The premium required to be paid in this plan can be easily afforded if you’re doing a regular day job.
Moreover, the earlier you plan to purchase term insurance for your loved ones, the lower your premiums are likely to be. If you want your premiums to be even lower, you should consider purchasing a plan online instead of looking for it offline.
Offers Higher Coverage Than Others
For traditional policies like endowment or ULIP plans, the total insured sum is only about 7-8% of the yearly premiums you’ve paid for the plan. To understand this in an even simpler manner, let’s take an example – if you purchase any of the above-stated plans for Rs. 20,000 as a premium, you only get coverage of two lakhs.
This is not even enough to cover your family’s daily expenses for even six months as per the current economy & inflation situation. On the other hand, a term plan offers several benefits along with a much higher sum-assured that allows your family to live financially free even in your absence.
On average, the total sum insured in a term life insurance plan can be over one crore. In simple terms, that’s about 60 times higher in comparison to the traditional investment policies such as ULIP, and endowment plans.
Premiums Locked During Policy Duration
With the purchase of a term plan insurance, you’re locking the premiums that you need to pay year after year till the tenure of your policy. That’s when you can gain the maximum benefits from this policy by starting earlier.
When you begin this policy at a young age, you’ll have to pay lower premiums. In figures, If you purchase a term plan with coverage of one crore at the age of 30 till you get 75 years old, you would be paying a premium amount of Rs. 10,000 every year.
In total, the gross amount of premium you’ve paid will be Rs. 4.5 Lakhs. On the other hand, if you purchase the same plan with identical features at the age of 45, you would require to pay a premium of Rs. 30,000 every year, and the total amount payable for thirty years would be nine lakhs.
Return of Premium Option
The base plan of a term insurance policy is only capable of providing life cover to your chosen beneficiary in the event of your unfortunate death. There is no benefit on maturity involved in the base plan of this policy.
But several riders allow you to get term insurance with the return of premium option. Although choosing this rider will increase your premium amount, you can get back the entire premium amount paid in case you survive till the end of the tenure of this policy.
Additionally, the returned amount can also be availed for tax benefits. This allows you to easily cover the day-to-day expenses of your spouse and loved ones. Moreover, even if you die unprecedentedly, the base plan still includes the life cover anyways.
Developed for Family Security
If you’re the lone breadwinner of your family, you must have a term insurance plan. As it provides life coverage to your family in the event of your untimely death. In case this happens, the plan will offer financial protection to your family that allows them to take care of their liabilities.
This makes term insurance ideal to make sure that your family is financially secured and manages to live a happy and comfortable lifestyle, even in your absence. Therefore, make sure you have a look at it for the well-being of your loved ones
The Takeaway
Term insurance is certainly a great financial decision for the financial security of your loved ones. However, there are a lot of term insurance plans available, each with unique features, riders, and benefits. This makes choosing a reliable insurance company extremely overwhelming.
Admittedly, it’s good to have a look at the benefits assured by the plan, but you can’t just make a decision solely based on term insurance benefits. All you need to do is firmly sit back and do your research on various plans.
You can also consider looking at the financial ratings of your preferred insurance companies or ask your broker to help you with a list. Hopefully, you may have found this guide helpful in knowing how term insurance benefits can help your family.
