Is It Good To Take Term Insurance?

We all know that life is full of uncertainty and anything can happen anytime without prior notice. Our lives are filled with numerous risks, including health issues, disability, death or accident. All these risks can happen without giving any warning, resulting in a huge emotional and financial burden to you and your family. Hence, it's very important to plan the financial future beforehand, so that your family members doesn’t undergo any difficulty in your absence and can always stay protected throughout their lives.

Term Insurance plans are one of the most popular life insurance plans that are helpful in ensuring the financial stability of your family at the lowest possible investment. If you are thinking insurance and investments are alternate terms, then you are not right. These two terms must not be confused with one another because an investment would not fulfil the entire financial necessity of the family on account of the untimely death of the policyholder.

Term insurance is by far, the purest and the most fundamental form of life insurance which provides the policy holder life coverage for a set term, after which it needs to be renewed. It is also one of the simplest and cheapest forms of life insurance policies.

While you are shopping for policies online, you may come across a lot of information that can get overbearing and confusing for starters. However, if you are wondering if term insurance can be beneficial to you, here are few pointers that can help you decide.

Investing in Term Insurance is Worth Your Money

Term insurance policies can definitely be a great investment, in case you have some kind of financial obligation like a mortgage, loans or higher studies for your kids. It is pretty affordable when compared to the other financial protection options and also provides a tax-free sum of money at the end of the term.

Apart from the obvious lump sum that these term insurance policies in India promise, here are a few benefits of investing in a term insurance plan.

A. Duration of the Policy

In a term insurance, you can determine the term till which you want the policy to run. Suppose if a person retires at 60, he would want his term plan to extend till he turns 60 after which he would need the financial cushion to fulfil the financial obligations that his family would incur in the absence of his income.

B. Low Premium and Claim Rejection Ratio

The premium amount associated with these term insurance policies are relatively lesser than the other kinds of insurance policies. You can get an INR 1 crore cover for a term policy of 30 years at around 8,500 if you started at the age of 30.

Also, the claim rejection ratios for these policies are relatively low and almost zero for those which have been active for 10 or more years. It is important for a policyholder to provide full disclosure of his health and financials during the purchase of the policy to minimize the risk of claim rejection in the event of his death. A recent mandate by IRDAI has however instructed that no policy can be rejected on the grounds of non-disclosure after two years of coming into effect.

C. Flexibility

This is perhaps the best benefit of investing in a term insurance. Here, you have the flexibility to opt for an online term insurance plan without much of a hassle and documentation. Most of the term insurance companies don’t insist on health check-ups for policies with cover amount lesser or equal to INR 50 lakhs. Also, you can customize the term insurance policies with riders for additional protection without complicating the original plan to a great extent. The riders can be availed at a nominal cost to cover accidental death, partial or complete disability, critical ailments, premium waiving, and income benefits among many others.

D. Adequate Financial Cover

Term insurance plans are not for those looking at a means of investment. However, if your aim is to secure your family financially, then these are the most effective means to do so. Depending on your age, financial conditions, and health, you can keep revising your cover as per your financial requirements and future obligations.

Tax Benefit in Term Insurance Policy

While tax benefits should never be the primary motivation behind buying a term life insurance policy, term insurance is no doubt also an efficient tax saving instrument. Here, both the death benefits and the term insurance premiums paid are exempt from tax under Sections 80C, 80D, and 10D of the Income Tax Act, 1961.

As per these, you get an exemption for around INR 1.5 lakhs per annum on premiums paid for you and your family. You would also be liable to a tax deduction of around 10% (15% in case the policy holder is suffering from any ailment or disability as listed under 80DDB of the IT Act) of the sum insured. The death benefit is also fully exempt from tax.

While term insurance is not a profit plan and can’t provide you with a hedge against the growing inflation, it is definitely the best possible investment to secure your family financially, in the event of your death at the most affordable price.

Buying the best term insurance plan

Term insurance plans are available on online or offline platforms. Nonetheless, it is extremely important to compare term insurance plans before making a final decision. You should compare several products with regards to the price as well as other features. Term Insurance is very much affordable as it mostly covers the life of the insurer without giving any maturity benefits. Offline plans term insurance plans are expensive as they involve administrative cost included in it. Online term insurance plans make more sense in today’s era of internet revolution. There are some insurer aggregator websites like Coverfox.com where you can compare term insurance plans of top life insurance companies in India. This way you can ensure to filter out the best term insurance suitable to your individual circumstances. Online term insurance plans are easy to buy as it does not involve tedious paperwork process and chances of making an error in the application form is also very less. The payment for the term insurance plan can be done online using a secure payment gateway.  So, don’t wait check the best term insurance plans and secure the lives of your near and dear ones today.