Life is an unpredictable roller-coaster ride; you better be prepared for it.
Did you read the news today? No? Well, you do not really need newspapers or channels to realize how uncertain life can be. One minute you could be walking down the street, whistling away your dreams and the next minute something unexpected can happen. It can both be a good something or bad something, but the thing is, you never really know which extreme your life is going to take the next turn to!
For me, this epiphany was good enough to finally look into the worth of getting a term insurance and the dreaded question, ‘Is it really worth it?’ Here are my two cents on the matter:
First things first, what exactly is term insurance?
Term insurance is the purest and cheapest form of life insurance products that provide cover for a specified term. It provides a financial security to the family in case of an untimely death of the primary policyholder; thus, enabling you to secure your family’s future even if you are not around. The best part is that the amount so received is tax-free under section 10(10) D.
Besides being a financial safety cushion for your family in case of an unfortunate event, a term insurance plan also provides many features as under:
- Low Premium
What makes term insurance so lucrative for buyers is its availability at the lowest premiums. This is due to the fact that term insurance plans only charge for insurance or protection component, and there are no investment charges whatsoever. Consequently, a higher sum assured is available to you at a lower premium.
Further, the earlier you get the insurance, the cheaper it is. While you are young, you are more likely to be healthy and free of any critical or chronic disorder. This makes you an ideal customer, thereby making you eligible for a lower premium, which is locked for the entire tenure of the policy.
- Use Flexibility
In case your whole family depends only on you financially, a term insurance policy is ideal to cover their needs in your absence. In case of an untimely death of the primary policyholder, the beneficiary is provided a lump sum of the assured amount, which can be used as a means for almost anything: funeral expenses, passive income for the spouse, college tuition of kids, debt consolidation, and more. The good part is that the lump sum amount disbursed to your family will be tax-free.
- One for everyone
Nowadays, term insurance plans are being molded more to suit customer needs. Ergo, five different kinds of term plans are offered based on certain needs: Standard Term Life Insurance, Group Term Insurance, Joint Life Term Insurance, Term Return of Premium, and Convertible Term Insurance Plans. What’s best is each plan is further customized according to the client's demand.
- Additional Benefits
There are various additional riders you can opt for during the purchase of the policy, such as Critical Illness, Accidental Death & Disability benefit, Waiver of Premium, etc. Not only these rider inclusions make term insurance more disposable and comprehensive for the customer, but also provides a cushion in terms of death, disability and diseases.
- Tax Benefits
You are also eligible to enjoy tax benefits on buying term insurance. As per the section 80C under Income Tax Act, 1961, the premium made towards a term insurance policy is eligible for tax deduction up to a limit of INR 1.5 lakh. Additionally, the premium paid to cover any critical illness is also eligible for tax deduction as per the section 80D.