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Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!
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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 realise 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 does not have any income or savings component. This means if the policyholder survives the policy term, there is no survival benefit upon maturity.
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 received from the term insurance would provide her with the much-needed financial protection.
Thus, it is quite evident that term insurance is vital to keep your family protected from the sudden loss of income they may face in the event of your untimely demise.
A term insurance policy is a pure protection policy with no investment element. This means it is the cheapest form of life insurance available in the market. 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.
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 you have any additional financial liabilities like a home loan, personal loan, or credit card bills.
The death benefit that 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 saving is a critical aspect of annual financial planning, isn’t it? 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. You can get a tax benefit up to Rs. 1.5 lakhs in a financial year. Additionally, the payout that your family may receive from the insurance company is entirely tax-free under Section 10(10D) of the IT Act.
Also, if you have purchased any health protection rider with your term insurance like critical illness rider, you can get an additional tax benefit up to Rs. 25,000 on the premium paid under Section 80D of the IT Act.
A term insurance policy ensures that your family get the financial cushion they need to survive even in your absence. So, make sure that you purchase a term plan as soon as you can.
- A Consumer Education Initiative series by Kotak Life
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