If you have financial dependents, a term plan is a must for your portfolio. As a pure protection plan, it offers the highest coverage for the least price, making it the most inexpensive life insurance product. Are you still in two minds? Read on to understand the advantages of term insurance, and make an informed decision.
Why should you buy term insurance in 2020?
The ongoing pandemic has revealed economic vulnerabilities and brought the value of life insurance into sharp focus. Also, the Indian lifeinsurance sector is about to see a significant price hike in term plans. India faced a negative mortality experience over the past year that led to a surge in claims. It has forced the insurance providers to revise term plan premiums.
Moreover, the cost of term insurance increases with age. When you buy early in life, you can enjoy lower premiums that remain constant throughout the policy period. Thus, to save on your premium outgo, consider purchasing a term plan as soon as possible.
What is the need for term insurance?
1 . Financial security
In the absence of your income, subsistence might become challenging for your loved ones. If you have unpaid loans, your family may face hurdles in repaying the debts. Besides, the loss of your financial support might hamper your child’s higher education. Moreover, your spouse might need the means to meet their healthcare costs in old age. A well-planned term plan cover can provide for all such exigencies.
2 . Cost-effective life cover
Having no investment element, the major part of your term insurance premium covers the mortality risks. Thus, for low premiums, you can buy an extensive coverage adequate for
your family’s financial needs.
3 . Flexibility
You can choose to pay the entire premium at one go with single premium term plans to avoid missing premiums.You can use the limited-pay option to pay off the total premium within the initial few years of the policy. It helps to avoid the burden of payments in your advanced years.If a regular payment scheme suits your budget, you can choose from monthly, yearly, half-yearly, and quarterly payment frequencies.You can also choose payout plans according to your family’s needs.
An immediate payout provides the death benefit in a lump sum. It helps your family to meet outstanding credits and such other expenses. They can invest the remaining sum assured for added benefits.If your beneficiaries need regular or monthly payout, you can arrange for a regular income through recurring payouts.
4 . Tax savings
Your term insurance premiums make you eligible for deductions under Section 80C of the Income Tax Act, 1961. The death benefits are also tax-exempt under Section 10(10D).
5 . Customized coverage with riders
Accidental death covers offer extra payouts over the base sum assured if a fatal accident occurs.Waiver of premium rider permits remission of your premiums if any accident causes a permanent disability. Yet the life cover continues throughout the policy tenure.A critical illness cover pays the promised sum on the diagnosis of complicated medical conditions. The proceeds help in funding your treatment costs, keeping your savings intact for your future needs.
Final word
Affordable premiums, several payout options and premium payment terms, and option to decrease life cover with changing needs make term insurance plans highly attractive. When you buy a term plan, pay attention to the reliability of your insurance provider. It will protect your family from hassles during claim settlement. You can trust Kotak
Life with your family’s financial well being and add the term plan to your financial instruments in 2020.
