Term insurance is not a new concept. You’ve probably heard of term plan insurance and questioned what it is or how it differs from other life insurance policies.
Before we show you how a term plan insurance policy compares to other life insurance plans, let’s define what a term insurance policy is.
A term plan insurance is a basic life insurance policy that guarantees to pay a specific sum of money, commonly known as the “sum assured,” if the insured (the person whose life risk is covered) dies within the period of the policy. If the insured lives for the duration of the plan term, no benefits will be paid out. Since the term plan insurance typically covers the risk of death solely, the premiums are quite inexpensive.
Even though a term plan insurance plan is a form of life insurance that offers coverage for your whole life, suicide deaths in the first year of the policy are not covered.
Who Should Get Term Plan Insurance?
In the following instances, term plan insurance is the best option:
- If you are searching for a term plan insurance that fits your budget, term insurance policies are your best bet, as they have a very low premium price.
- If your salary is in the middle range or if you are the sole breadwinner, you should consider term plan insurance. You can get a substantial policy to safeguard your family’s financial future in the event of your untimely death.
- People about to start new jobs or company projects might save money by buying term plan insurance instead of an endowment policy. This would let them use their remaining income or capital to advance their careers or businesses.
- Businesses can also use term plan insurance to give low-cost life insurance to their employees, particularly those in the labor class. The best part is that these businesses may subsequently deduct the amount as business expenditures.
- Term plan insurance is suitable if you seek a high level of life insurance coverage for up to 70 or 75 years.
The Key Characteristics of a Term Insurance Policy:
Enhanced Security
The finest aspect of a term plan insurance policy is the ability to increase life coverage. Few insurance companies let policyholders increase the amount of life insurance they have during important times.
Tax Exemption
U/S 80C, the Income Tax Act of 1961, all premiums paid for life insurance plans are tax-exempt up to Rs 1.5 lakh.
Now comes the crucial question: how to select the finest term plan insurance? Here are several recommendations to help you get the best term insurance coverage for your needs.
- Coverage Amount: Consider your current lifestyle and the number of dependent family members. When selecting the proper term plan insurance, you must constantly consider your own demands and those of your entire family. Coverage should be sufficient to support the financial demands of you or your whole family.
- Lifestyle: Life insurance coverage is primarily determined by the lifestyle of your family members. Think about the amount you need to keep living the way you do now, and then set up your life insurance accordingly.
- Policy Requirements: Even though it’s best to buy life insurance based on your income, it’s smart to buy a policy based on your family’s needs. You should ensure that the life insurance policy you select will be sufficient to cover the future needs of your entire family.
- Premium: After you’ve thought about all these things, the last step is to decide how much you’re willing to pay in premiums. You can also use the term life insurance calculator to find the premium according to the policy you are considering buying. However, ensure that none of those mentioned above aspects are compromised due to expense. Now that term plan insurance has a low premium; it is more feasible to get a large coverage life insurance policy for the same cost as an endowment plan.
Final Words
A term plan is quickly becoming a need in every Indian’s life. The aforementioned advantages barely scratch the surface of the importance of long-term planning and its indispensable function in our lives. You may prioritize your family’s financial safety and stability by purchasing term insurance.