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Take 100% Responsibility of Your Family with Term Life Insurance

Term Life Insurance is necessary for today's era because you wouldn't want your family to experience financial hardship in your absence. Read here to learn how to take 100% responsibility for your family.

  • Nov 12, 2019
  • 2,609 Views

When you buy a family term insurance plan, you take a step to provide for the financial stability of your loved ones in your absence. Life is uncertain, and the best way to handle it is by considering how you want your loved ones to live after you are no longer around to take care of them. You may be quite fit and are leading a healthy lifestyle; however, it is always better to take the right steps at the right time. Investing in term life insurance for family plans will help ensure that the future of your loved ones is secure.

What is term life insurance?

Primarily, you need to understand how family term insurance work. A term insurance policy is a very basic plan that covers the risk of death. It is a simple plan with no frills. In this plan, the insurance company will pay an agreed life cover amount on the insured’s death. In return, you agree to pay a certain amount in the form of a premium each year for the coverage. If you survive the policy term, there is no survival benefit paid to you. One of the biggest benefits of term life insurance for families is coverage for life at a low premium amount.

How does term life insurance help you?

Here are different ways in which term life insurance for family helps you.

Provides financial security

In a family term insurance plan, the insured enjoys a high amount of life cover. This amount will be paid as a death benefit on the demise of the sole breadwinner of the family, and it acts as an income replacement source. It helps your loved ones maintain their lifestyle without falling into a debt trap.

Liability repayment tool

The amount paid at the time of death benefit will be a tool for the repayment of liabilities in case of an untimely death of the income earner. Hence, if you have any outstanding loans and you have to pay them off, your family will be able to do so from the sum they receive.

The simple and straightforward features of term insurance make it an ideal investment option. The premium is cost-effective; hence, you will not feel that it is a burden. The premium amount on the insurance policy is exempted from tax up to INR 1.5 lakh according to Section 80C of the Income Tax Act, 1961, and the death benefit paid to the nominees is tax-free under Section 10 (10D) of the Act. What are you waiting for? Buy the right term life insurance for your family right now.

Did you know:

Life insurance policies and term insurance policies are the two different types of life insurance.

A term insurance policy only provides security for a predetermined amount of time and only pays out the money if you pass away during the term. Additionally, the policy expires, and the coverage ends if you outlive it. An investment-cum-protection plan, on the other hand, pays you a fixed amount at the conclusion of the policy’s term.

How a Term Plan Secures, Your Family

Conventional term plans offer protection cover in the case of the policyholder’s death for a certain amount of time, making them the purest kind of life insurance. Term plan durations can range from 5 to 40 years or even more depending on the policyholder’s and the insurance company’s ages. For insurance firms to evaluate the risk they assume with each policyholder, with respect to any pre-existing medical issues and their general lifestyle, they typically demand a medical check-up before their issuance. Comparing family term insurance to conventional life insurance plans, the premium payments are typically lower while the coverage amounts are comparable or higher.

Financial Security

Term life insurance for family policies provides financial security for the policyholder’s family by paying out death benefits in the event of their passing. In such circumstances, they protect dependents from having to shoulder the financial obligations of the deceased, such as the policyholder’s spouse, children, or elderly parents. This benefit is especially important for newlyweds, new parents, and business owners with large debt loads or other financial commitments. The payments may be made regularly or all at once after making a claim. The deceased’s relatives can use this cash to take care of their basic necessities and invest in things like a child’s education.

Reasonable Premiums

Term insurance policies offer comparable coverage amounts to regular life insurance policies at a fraction of the premium costs, making it one of the most cost-effective types of life insurance available today. This is mostly because such programmes have shorter terms and can only be renewed periodically.

Flexibility

In circumstances where the policyholder has incurred debt in some way, such as loans, some term plans may let the level of coverage to decline throughout the duration of the tenure. As debts gradually pay off throughout this period, the coverage reduces with time. As an alternative, family term insurance policies may raise the payout amounts to reflect inflation or, as a maturity benefit, repay the premiums paid when the tenure expires. Last but not least, certain plans might also provide investing alternatives that produce income over the course of the tenure and raise the final payment amount at expiration. The most typical requirement for such adjustments is paying marginally higher premiums.

Tax Benefits

Under Section 80C of the Income Tax Act of 1961, premiums paid for term insurance are tax deductible up to a maximum of ₹1.5 lakh annually. However, depending on several variables, Section 10D may also totally exempt death payments in some circumstances. Before expiration, policies must be renewed because tax deductions for premiums paid on lapsed policies may not always be available.

Coverage Of Additional Risks And Illnesses

Policyholders may be able to obtain coverage for additional risks, such as genetic or critical illnesses or even accidental disabilities, by paying a small sum over and above the monthly payment. At pivotal points in their lives, such as marriage and children, they may also consent to top-ups that broaden the scope of the policy coverage.

Conclusion

For term plans to be as effective as possible, you must choose a policy that meets your long-term needs. When deciding on your coverage amount, make sure to take responsibilities like outstanding debt into consideration, as doing so would spare your family members from having to shoulder them if you die away. The ideal coverage quantity to select is 15-20 times your yearly household expenses or more.

Regarding the number of years that you will be expected to work, it is also crucial to consider your age when applying for coverage. Additionally, buying term insurance will be simpler while you are younger because insurance companies will probably view you as a lower-risk investment than older consumers. Online insurance purchases may also be less expensive because there are frequently no brokerage fees involved. Convinced? Buy term life insurance for your family now.

Kotak e-Term Plan

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Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

- A Consumer Education Initiative series by Kotak Life

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