Five Reasons Why Everyone Should Buy a Term Insurance
Life is full of uncertainties. We may judiciously plan our long term financial goals. However, a sudden event like death can jeopardize our goals and leave your family financially crippled. Our savings may prove to be insufficient with factors like inflation coming into play. In the absence of our physical presence, it is important to make arrangements for our family to be financially secure.
That’s the reason why people prefer term insurance. The benefits offered by Term insurance are far superior to the benefits offered by traditional endowment plans. Though nothing can compensate for your absence in that moment of grief, the lump sum payout they receive will help them at least forget the financial worries.
In this article, we will explain the top 5 benefits of Term Insurance,
- It is simple
Term insurance is probably the simplest of insurance policies in terms of understanding. You pay a premium for a fixed tenure, say like 25 years), within the policy if anything happens to you, your family will receive the benefits. All you need to ensure is that you pay the premium on time throughout the policy tenure.
The premium for the term insurance is very modest; it is just about 0.1% of the sum insured. Compared to other life insurance product, the premiums for term insurance is the cheapest. You can also increase or decrease your sum assured according to your financial position in life. The premiums are less for young applicants and remain the same throughout the policy tenure.
- High Coverage amount
For the premium that you are paying, the benefits that you reap is high. A term plan offers a much higher sum assured than other plans so that your family will not undergo any financial hardships from your absence. Coverage provided by term insurance policies is significantly higher than the coverage offered by an endowment or ULIP plans. Also, some new-age insurance companies are offering some unique term insurance policies that offer maturity benefits on survival.
- Premiums remain the same
Suppose if you are purchasing a term insurance plan by paying a premium. Eventually, you are locking the premium for this year, next year, and the forthcoming years. Term insurance premiums are low when you are starting at a young age. If you start paying a premium, say a monthly premium of Rs. 1000 when you are 25, you will be still paying the same amount even when you turn 50. Thus, it is advised to start purchasing life insurance at a younger age. Also, to factor in the unpredictable nature of life.
- Tax Benefits
Premiums paid towards term insurance are eligible for tax deductions up to ₹1.5 lakhs under Section 80C of the IT Act 1961. Besides you can claim deductions up to Rs. 25000 for health-related policies such as critical illness cover under section 80(D). Moreover, the death benefits that your nominee receives are tax-free under Section 10(10D).
In Conclusion, Term life insurance is a mandatory financial product that everyone needs to have at some point in life, considering the broad length of their benefits.