Life is unpredictable, and you never know what it throws at you at any point in time. This is why it is important to safeguard yourself and your family from such uncertainties.
A term plan offers an affordable and simple way to protect the financial security of your family in your absence. You choose the sum assured and pay the premium regularly for a certain period. The insurance company provides you with life cover against the premium.
In case of a mishap during the policy duration, your nomineesreceive the benefits as a lump sum. Alternatively, the payout may be a combination of a lump sum and periodic fixed installments.
Having understood term plan meaning, here are five reasons why you need a comprehensive policy:
- Financial security of your family
If you are the only earning member in your family, an untoward incident may risk the financial stability of your loved ones. While dealing with the emotional loss, you do not want them to face financial distress.
A term plan will pay the policy benefits in such a situation, which protects your family against financial difficulties. Knowing that they are in a financially strong position will help them deal with your absence in a better way.
- Tax savings
You pay a certain amount as premium when you buy a term insurance plan. You can avail of a tax deduction for this cost, according to Section 80C of the Income Tax Act, 1961. The maximum benefit available is limited to INR 1.5 lakh. This helps to save a significant amount in taxes over the long-term.
Additionally, the policy benefits received by your nominees are tax-free. This tax benefit is as per the regulations of Section 10(10D) of the Act.
- Securing life goals
Financial goals are dynamic and change at various stages in life. You may need to enhance the coverage (sum assured) as your responsibilities and financial goals increase over the years. Some term insurance plans allow you to increase this amount at specific milestones during your life.
This helps your family to meet their financial objectives, such as children’s education, wedding, and old age fund requirements of your spouse in your absence. A term insurance plan proves beneficial in ensuring that your loved ones can fulfill their dreams without facing any financial distress.
- Protection against critical illnesses
Lifestyle-related disorders are constantly rising due to unhealthy living and stress. Additionally, medical costs have increased due to advanced technology and inflation. In case of a diagnosis of a critical illness, you may not be able to afford the best treatment due to a lack of funds.
To protect you from this situation, you may include a critical illness rider to the base term plan. A health plan will cover only the hospitalization costs;however, treating thecritical illness has several other expenses. You may also face a loss of income due to the inability to work like before. This rider will pay the amount when you are diagnosed with an included ailment. You may use these funds for treatment, medicines, diagnostic tests, repaying loans, or meeting daily expenses.
- Peace of mind
You have many obligations towards your parents, spouse, and children. A term plan allows you to rest easy because you have protected their financial future even if you are absent.
With the policy benefits, your family will be able to sustain their present style of living, pay for your children’s education, and meet other financial responsibilities without any difficulty. With an adequate sum assured, you can live stress-free knowing that your family will face no troubles in case of an unfortunate incident.
Several insurers offer different types of term insurance plans in India. Compare and research these today and do not delay your decision any further.