Life is unpredictable. There is no way you can avoid facing these challenging times but can keep yourself and your family prepared for it financially. It is necessary to protect your family in your absence, especially if you are a sole income earner. While various life insurance products allow you to achieve this, term insurance is the most affordable life insurance plan available in the market.
The primary objective of term insurance is to provide financial security to your dependents in the event of your untimely death. The insurer pays a lump sum amount as a death benefit, which can be used by your family members as and when needed. That way, they do not have to face any financial crisis after your sudden demise.
To help you understand why you should buy term insurance, we have collated a few benefits that the policy offers. Take a look!
The top benefits of term insurance are explained below -
Financial security of your loved ones is a primary purpose of getting term insurance. The insurer will provide a death benefit (sum assured chosen by you when buying the term policy) to your dependents after your death. This means you no longer have to worry about how your family will manage their future finances after your untimely demise.
There are some key term insurance tax benefits that you should be aware of - the premiums paid towards the term plan can be claimed for tax deductions under Section 80C of the old income tax regime. Also, the death benefit received by the family members is tax-free under Section 10(10D) of the Income Tax Act, 1961.
Insurers in India allow you (the policyholder) to enhance the scope of your term plan with rider benefits. You can select riders such as critical illness cover, waiver of premium benefit, accidental death benefit, etc. Get in touch with your insurer to know the different rider benefits offered under term insurance plans.
As mentioned earlier, term insurance is the most affordable life insurance product available in the market. However, when it comes to buying term insurance in India, everyone looks for ways to save money when purchasing the policy. But do you think a cheap term insurance plan will suffice your goal of enabling your family to be financially independent in case of any uncertainties? What if the term insurance claim gets rejected?
So, it is highly advisable to consider the following factors besides premiums when buying term insurance in India.
Insurers in India offer term insurance with 35-50 years of tenure. Since people are living a long life lately, it is best to opt for a term policy with a longer tenure. That way, you will be covered for a longer duration and do not have to buy a new term insurance plan in the future in case the first one was to lapse.
Most term plans available in the market come with a maturity age between 60 to 80 years. Since you are prone to acquire health issues as you grow old, it is best to select a plan with maximum maturity age as the policy will offer coverage for an extended period.
Usually, cheapest term insurance plans tend to have a claim rejection rate of over 50 per cent. If you buy a cheap term insurance plan and the claim made by your dependents gets rejected due to some reason, then your family will be left with no financial aid after your death. Moreover, the investment made in the plan all these years will be of no use.
The insurer offering cheap term insurance plans and less coverage may possibly have a low claim settlement ratio. The claim settlement ratio shows the insurer’s efficiency to settle your claims in the future. Ideally, it is recommended to select an insurer with a high claim settlement ratio. The ones with a low claim settlement ratio indicate that company’s inefficiency to settle claims.
Life uncertainties can occur on you and your loved ones without prior warning. While you cannot avoid them, you certainly can keep your family financially prepared to face them. A term insurance plan is a wise investment at any age.
Let us take a detailed look at how you can choose the cheapest term insurance plan, depending on your age.
Usually, people are just starting their career in their 20s. Most individuals have little to no liabilities on their head. The reason young adults in their 20s should consider investing in term insurance are as follows:
Most people have student loans to pay off. Having a term insurance plan will allow your parents to repay this debt soon if anything were to happen to you.
The chances of you contracting a life-threatening disease in your 20s are relatively low. Your health is at its prime, and hence the term insurance premiums will be cheaper than expected.
People in their 20s can get a term insurance coverage of up to Rs. 50 Lakhs at a premium of approx. Rs. 3800 annually.
The 30s is the time when your life starts unfolding. You start planning for a family and have rising financial needs. A term insurance plan ensures that your loved ones do not have to face any financial discomfort in your absence. The reasons you should consider buying term insurance in your 30s is as follows:
People’s income significantly rises in their 30s. So, it is wise to spread it in different investments and insurance plans for better returns. Term insurance is one such investment that safeguards your family financially after your death.
As most people start planning a family in their 30s, financial liabilities begin to build up. In such a situation, of anything were to happen to the earning individual, the burden falls upon the family. Having a term insurance plan ensures that financial liabilities are repaid without overburdening the family in your absence.
By this time, most people have settled their loans and other liabilities. Primarily, people start to save money for their child’s future and their retirement during this time. Term insurance allows you to conveniently save money for your child’s future and safeguard your partner’s life in your absence. The reasons you should consider buying term insurance in your 40s is as follows:
For those whose spouses are financially dependent on them, term insurance allows you to secure their future after you.
Most insurers offer term insurance plans with critical illness cover. So, in case you suffer from any life-threatening disease in your 40s, or later, the policy will pay a lump sum amount to take care of the expenses incurred in the treatment.
Term insurance in your 40s will cost you approx. Rs. 7000 annually for Rs. 50 Lakhs coverage.
While it is best to invest in term insurance at the earliest, there is no harm in buying the policy in your 50s or later. However, there are certain factors that you need to know when buying term insurance late in life.
The term insurance premiums are relatively expensive when people of the age of 50 years and above want to buy the policy. The chances are that you may end up paying twice the premium amount in your 50s compared to what you may be paying in your early 30s.
Most insurers would ask the applicants of 50 years old and above to get a medical certificate before issuing the term plan.
Irrespective of the health conditions, people in their 50s will have to pay high term insurance premiums.
Term insurance is the most affordable investment and should be purchased at the earliest to acquire cheap premium rates. You can consider buying term insurance at Finserv MARKETS online and benefit from features such as affordable premium rates, rider benefits, tax benefits, extensive coverage, and more. In fact, you can readily buy term insurance plans using the Finserv MARKETS App as well.
So, don’t wait. Secure your loved ones with a term insurance plan at Finserv MARKETS today.