To prepare for one’s future and secure a financial support system for one’s dependents is a necessary practice that has fortunately become more prevalent in a post-pandemic world. Financial planning for oneself and their loved ones is a non-negotiable aspect of living at times of inflation and high-living costs.
A term plan can be a useful resource and a lifeboat for families undergoing financial distress in the absence of their primary income earner. Knowing the best term insurance is best and investing in it is an imperative choice that should be made by those starting their insurance journey, for the tenures are usually ranging from 25 to 30 years and it can be beneficial to start as early as possible.
While choosing the best term insurance in India, one should understand that a term plan is made effectively to cover the needs of the insured and their dependents through an assured benefit sum in the event of the policyholder’s demise. A basic term plan in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage and payout methods as per their convenience. Therefore, let us take a look at the benefits of term insurance
- Affordability: Since a term insurance plan today qualifies as more of an asset than a supplementary policy; they are made with the goal of providing accessibility to financial security for people across all income brackets.
The premiums that are paid towards a term plan can be as low as Rs 600 for a coverage of Rs 1 crore. These prices ensure affordability for the policyholder, and a significant amount for the dependents to avail in the event of the insured person’s passing or at the time of maturity. Premiums can easily be added to one’s monthly budget as a recurring expense that does not financially strain the policyholder.
- Financial Support: The goal of investing in the best term insurance plan in India is to ensure that the family, or beneficiaries of the policy are able to fulfil their monetary obligations without interruption even when the insured person dies.
One can expect to receive a death benefit sum over nominal premiums costs; this can help the beneficiaries to meet their expenses, pay off any outstanding debts or even fulfil educational expenses without compromising on their goals. This eases any financial strain on the beneficiaries especially if they are not capable of replacing the income that the insured was earning to sustain the family.
The financial support provided by a term plan is not limited to death or maturity. One can add supplementary riders to their existing plan for situations such as accidental death, disability, critical illness, and waived premiums for a price that is added over and above the premium cost.
- Payout Methods: The manners in which a policyholder’s income is fulfilling their financial obligations is something that should be taken into consideration while choosing a term plan. Since the standard plan is to give a lump sum payment to the nominee of the policy, one can also choose how to avail the sum in case monthly disbursal is more suited to them.
As per the needs of the family, they may benefit more from the lump sum being converted into a monthly, quarterly, bi-annual, or annual income as per their requirement.
- Post-Retirement Security: Retirement can be financially stressful process if an individual does not prepare in advance for the change in income patterns. A term plan eases this transition, where a policyholder can choose a shorter premium payment tenure so that they will not have to pay premiums after a certain point; but will be covered by the term plan even in retirement. A whole life plan is one that offers a similar insurance structure.
- Spousal Benefit and Coverage: One of the unforeseen eventualities that a family must prepare for with the help of term insurance is to insure the primary earning member and have a means of monetary backup in their absence.
However, families where both partners make equal financial contribution, or where one of the spouses is a homemaker one can avail coverage for both under a joint term insurance plan. This protects the family unit as a whole; with the added benefit of a single premium to be paid for both; with no change in coverage or death benefits.
- Rider Benefits: One can add riders for Income, Waived Premiums, Disability, Accidental Death or even Critical Illness in their existing term plan. The cost of these riders added to the basal premium cost, hence one should choose after adequate deliberation.
- Tax Benefits: The premiums paid for a term plan and the payout sum thus received from the same at the time of maturity is exempted from taxation under Section 80C and 10(10D) of the Income Tax Act, 1961.
To find insurance solutions fit for their situations and to help make it better, investors look out for term plan comparison to determine which term plan is the best within the abundance of options that exist within the diverse insurance market in India.