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Ref. No. KLI/22-23/E-BB/492
Short Term Insurance Policy - Find out what is term insurance policy and some key important features of short term insurance policy here on this article. Visit Kotak Life to know more Term Insurance
The principal purpose of term insurance is to serve as your family’s financial backup. A term plan’s cover remains active for a defined period. It provides a guaranteed sum to your nominee in case of an unfortunate event during this time span.
Term plans usually provide coverage for 5 – 40 years. However, if you need a temporary financial fallback for your loved ones, you can select a short policy period. Such a term plan with short tenure is known as a short-term insurance policy.
Features of short-term insurance
1.Death benefit: The policy pays the sum assured to your nominee if an unwanted event occurs during the policy term.
2. Tax deduction: The premiums for your short-term policy are eligible for deduction from your taxable income under Section 80C of the Income Tax Act, 1961.
3. Add-on covers: For a nominal increase in the premium, you can extend your base cover against possible contingencies and get:
4. Low premiums: Term plans have no investment feature. Hence, these policies typically require lower premiums than other life insurance products. Also, the premium amount depends on the policy period and the sum assured. Since short-term insurance policies have lower policy tenures, the premiums are usually low.
When to get a short term insurance policy?
If you have immediate financial liabilities that can burden your family in case of an unforeseen event, a short term plan can be useful. You can consider buying this policy if:
However, a short-term policy is not meant to replace the coverage your family needs to meet their living expenses in case of an emergency. You should use it only as an additional layer of financial protection over your existing life cover or bridge any insurance gap.
If you have a temporary need for additional life cover, you can compare different term plans online. Look into the benefits offered and premiums needed. Then select one for the duration through which you need coverage.
Ref. No. KLI/22-23/E-BB/2435