Why You Must Include Term Insurance In Your Financial Planning?

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Why You Must Include In Your Financial Planning?

Why You Must Include In Your Financial Planning?
  • 22nd Dec 2021 |
  • 770

The onset of the COVID-19 pandemic reinforced the importance of having a sound financial plan to secure the family from the risks to life and livelihood. It has also made every individual realize that a robust financial plan needs a strong foundation of a term insurance policy.

A term insurance plan is the most basic form of life insurance. A pure protection plan, term insurance, provides a death benefit to the policyholder’s family in the event of their untimely demise during the policy term. However, you must know that a term plan has no income or savings component. This means if the policyholder survives the policy term, there is no survival benefit upon maturity.

Let us understand that term insurance must be a part of financial planning.

It acts as an income replacement for the family.

Let us understand how term insurance acts as an income replacement with an example.

Mrs and Mrs Tiwari are a young couple in their early 30s. Mr Tiwari is an entrepreneur, and his wife is a homemaker. Mr Tiwari, being an astute financial planner, purchased a term insurance policy early in his life and named his wife as the nominee.

Now, suppose Mr Tiwari meets with an accident and passes away. Though Mrs Tiwari may be distressed about losing her husband, she wouldn’t have to worry about the loss of income as the proceeds from the term insurance would provide her with much-needed financial protection.

Thus, it is quite evident that term insurance is vital to protect your family from the sudden loss of income they may face during your untimely demise.

Affordable premium

A term insurance policy is a pure protection policy with no investment element. This means it is the cheapest life insurance available in the market. Therefore, you can purchase a policy with a high sum assured that offers more protection to your dependents and eliminates future risk to the family at an affordable price.

The earlier your purchase the policy, the more affordable the premium will be. On average, you may spend only 1% of your annual income to purchase term insurance and get protection against the uncertainties of life for up to 10 years or more.

Financial security for the family

If you are the only earning member of your family, your sudden demise may leave your family vulnerable financially. The dependent members may struggle to make ends meet, especially if they have additional financial liabilities like a home loan, personal loan, or credit card bills.

The death benefit your family may receive from the insurance company can help them take care of the liabilities and maintain their current lifestyle. Thus, having a robust term insurance policy as part of your financial plan gives you the reassurance that your family’s financial future is secured.

Tax benefits

Tax saving is a critical aspect of annual financial planning. As a tax-paying individual, you may be looking for different ways to save your yearly tax liability. Apart from giving your family financial protection against the uncertainties of life and acting as an income replacement, a term cover can help you get tax benefits every year.

The premium you pay for the policy is eligible for tax deduction under Section 80C of the Indian Income Tax Act. As a result, you can get a tax benefit of up to Rs. 1.5 lakhs in a financial year. Additionally, the payout your family may receive from the insurance company is tax-free under Section 10(10D) of the IT Act.

Also, suppose you have purchased any health protection rider with your term insurance, like a critical illness rider. In that case, you can get an additional tax benefit of up to Rs. 25,000 on the premium paid under Section 80D of the IT Act.

What does a Financial Plan Include?

Along with clearly stating your goals, the financial plan should include an investment strategy that will enable you to make consistent investments toward achieving those goals.

For you and your family, a thorough financial plan will include the following:

  • All urgent financial requirements
  • List all of your long-term financial planning goals
  • Investment strategies for achieving long-term financial planning goals
  • a strategy to increase your savings
  • Make plans to reduce your tax obligations.
  • Your intended retirement age
  • Emergency financial planning contingency

In India, where the nuclear family arrangement is increasingly the norm, it is crucial to safeguard your family from threats. When we are young, we typically think that our role in the family is to manage it, but as sedentary lifestyles become more prevalent, even younger individuals are developing serious illnesses and dying young. The absence of a breadwinner not only bears an emotional toll on the family but also has financial repercussions. A term plan ensures that the family will get much-needed financial support and be able to maintain their current standard of living even in the event of the breadwinner’s death. As a result, it needs to be your initial step in financial planning.

A term insurance policy ensures that your family gets the financial cushion needed to survive even in your absence. So, make sure you purchase a term plan as soon as possible.

Kotak e-Term Plan

Download Brochure


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

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


Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Can Term Insurance Plans Be Purchased As A Gift?

Protection for your family

How To Choose the Right Term Insurance Plan?

What Happens if you Hide Facts in your Term Insurance?

10-Year Term Life Insurance Policy - Explained in Detail

How do I Calculate My Term Insurance Premium

Online vs Offline Term Insurance: Which Is The Better Option To Buy

Advantages of Buying Term Insurance in Your 50s

Insuring Protection Against Death With Death Insurance Rider

Tax Benefits of Term Insurance in India

Ensure Protection Against Death, Disease & Disability With Life Insurance

What is Insurance Premium - A Detailed Guide

Increasing Term Insurance and Riders

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

Why Buy Term Insurance Even at Rising Rates?

What are the Documents Required for Term Insurance Plan?

5 Things To Consider While Buying Term Insurance Plan

Term Insurance: What Happens When You Don’t Pay Your Premiums?

All you need to Know about Term Insurance Plans for housewives

How To Choose the Right Sum Assured Under a Term Plan?

Term Insurance Basics You Should Know

Why Should You Not Take A Term Plan Without Medical Test in India?

Do I Need to Give a Medical Test for Term Insurance in India?

Insuring Against Accidents with an Accidental Death Insurance Rider

How Much Term Insurance Do I Need

Why Buy Term Insurance Plan With a High Cover?

Can I Extend the Tenure of My Term Insurance Plan?

Should You Have Multiple Term Life Insurance Policies?

Should you buy a Renewable Term Life Policy?

3 Things to Consider When Buying Term Insurance, If You are Single

Choosing Riders for Insurance Plans

4 Things To Expect From Your Term Insurance Plan in India

What Are Insurance Riders and How to Choose Them in a Term Plan?

How to Ensure That Your Term Insurance Claims Are Never Rejected?

Gift Your Father A Term Insurance Plan This Father's Day

What Are the Best Term Insurance Plans for Planning Retirement?

Term Insurance vs Life Insurance: Understand the Difference and Benefits

Form 16, Form 16A, and Form 16B?

8 Factors to consider before choosing a Critical Illness Insurance

Should you have more than one nominee in your term insurance?

Key Differences Between Term Insurance, ULIPs, And Health Insurance

Do You Need Term Insurance Cover After Retirement?

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

Calculating Term Insurance Premium

How Does Term Life Insurance Work? Learn the Benefits

How Not To Get Your Term Insurance Claim Rejected

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

Why Term Plan Should Be The First Step To Securing Your Future?

Term Insurance with Critical Illness

How To Change The Nominee in Term Insurance?

What are the Tax Benefits of Sukanya Samriddhi Yojana (SSY)?

Insuring Against Disability With Disability Insurance Rider

Is a Term Insurance Policy Portable?

What is a term insurance plan with a return of premium, and how does it work?

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

What Should Be The Duration Of Your Term Plan in India?

Buying A Term Insurance Plan? Take These Factors into Account

Term Plan with Spouse Cover

Different Types of Protection Plans

Can I Get Term Insurance on Behalf of My Spouse?

What Types of Deaths Are Covered in a Term Insurance Plan?

Why Term Insurance Is Better Than ULIP?

Can Senior Citizens Avail Term Insurance?

10 Ways to Get Your Kids Involved in Your Healthy Lifestyle

4 Reasons Why You Need Critical Illness Cover

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

9 Ways to Help Family Members in Financial Trouble

What Should You opt for - Limited or Premium Pay?

What is a short term insurance policy?

Endowment Plans vs Term Plans: Understanding the difference

Is ₹1 Crore Term Insurance Good Enough Cover?

कोविड -19 बूस्टर खुराक के दुष्प्रभाव

Insuring yourself against Ill Health with a Critical Illness Rider

Understanding Term Insurance Riders

Planning For Children's Future

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

Why does every working women need life insurance?

Term Plans are Definitely Cheaper than You Think!

How to Compare Term Insurance Online

Can You Increase Your Term Insurance Cover?

Is It Good To Buy A Term Insurance Plan In 2022?

Why should single women purchase term life insurance?

How to Buy 1 Crore Life Insurance Policy Without Medical Test

Is term Insurance Needed for People With No Dependents?

Why is it important to buy term insurance plan?

Difference between Section 80C and 80CCC of the Income Tax Act, 1961

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

Steps on How to Buy Term Insurance Online

Difference Between Term Insurance and Endowment Plan

What is Term Insurance? Term Plan Meaning and Definition

What are incremental term insurance plans?

Term Insurance Plans and Policies for Smokers

All About Term Insurance Inbuilt Coverage

Insurance Policy for Housewife In India

Term Insurance: Smokers vs Non-Smokers

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

Is Group Term Life Insurance Provided By Employer Sufficient?

Should You Buy a Term Plan After 40?

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

8 Benefits of Term Insurance You Should Know

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

9 Tax Changes in Budget 2019 that may Impact Your Personal Financial Planning

How Much Cover Should I Take In A Term Plan?

What All Documents Required For Term Insurance In India?

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

Reasons You Need Term Insurance Plan as a Self-Employed Person

Side Effects of Covid-19 Booster Doses

Can I Make Changes to My Term Insurance Policy Post Purchase?

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

9 Most Frequently Asked Questions on Term Insurance

How Much Term Life Insurance Cover Do I Need?

8 Types of Death not covered in Term Insurance Plan

Planning For Son or Daughter's Wedding

Is Term Life Insurance Plan an Investment or Expense?

Is Life Insurance Investment Worthy Enough

6 Types of Death not covered in Term Insurance Plan

Can I Buy Term Insurance for a COVID-19 Patient?

Tips to Choose the Right Term Period for Term Insurance Plan

5 Benefits of Early Retirement Planning

Know How to Invest at Every Age for Larger Returns

What Is a Renewable Term Insurance Policy?

10 Ways to Mentally Refresh After a Stressful Day

Busting Myths and Facts About Term Insurance Policies

What Is the Correct Age to Buy Term Insurance?

5 Reasons to Buy Term Insurance When You are in Your 30s

Term Life Insurance Plan for Smokers vs Non-Smokers

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

5 Term Insurance Benefits for Single Women

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

8 Things To Do After Buying Term Insurance

Why Should You Add a Rider to a Term Insurance Plan?

Importance of Term Insurance at Every Stage of Your Life

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

How Does A Term Life Insurance Work in India?

While Buying Term Insurance Compare Features, Not Just Premiums

All about Online Income Tax Calculator

Zero Cost Term Insurance Plan: What is & Should you buy it?

Why 1 Cr Term Plan Is Necessary For Family?

Best Investment Plans for Children - Secure Your Child's Future

Is There Any Tax Benefit on Term Insurance?

4 Methods to Calculate How Much Term Insurance You Need

Why Married People Should Buy Term Insurance Under MWP Act?

Why Premium Amount for Term Insurance is So Low?

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

Do Beneficiaries Pay Taxes on Term Insurance?

How To Calculate The Amount Of Term Life Insurance You Need?

Why Term Insurance Is Important in times of COVID-19?

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

Term Insurance Age Limit – Term Plan for All Age Groups

Does Your Term Insurance Plan Cover Death Due to COVID-19?

Make Your Online Term Plan Your Family's Monthly Pay Cheque

Individual Life Insurance vs. Group Term Life Insurance

How to Surrender Term Life Insurance When You Have No Liabilities?

Everything About Claim Settlement Ratio for Term Insurance

What is Critical Illness Policy?

Why Should New Parents Buy Term Life Insurance?

Top 3 Reasons Why You Should Buy A Term Plan Now

Advantages & Disadvantages of Term Insurance in India

Term Insurance Calculator - Everythng You Need To Know

Term Insurance With Riders In India

How to Identify Term Insurance According to Your Needs?

Why Spending Time with Friends is Essential for Your Mental Health?

Different Types of Premiums in Term Insurance?

Make Your Online Term Plan Your Familys Monthly Payout

9 Point Guide on how to File Income Tax Return Online

Cost of Term Insurance Likely to Increase Soon

Which Death Type Does Your Term Plan Not Cover?

Does Term Insurance Cover Accidental Death?

जीवन बीमा पॉलिसी लेने की प्रक्रिया क्या है?

Comparing Term Plans – What Should You Look Out For

Why Should You Buy Term Insurance in 2022?

6 Reasons That Make Term Insurance a Must Buy

Should Youngsters, Working Couples Buy Term Insurance Plans?

भारत में जीवन बीमा कितने प्रकार के होते हैं?

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

Eligibility Criteria for Buying Term Insurance in India

भारत में गृहणियों के लिए टर्म इंश्योरेंस