How does a Term Insurance Plan Help to Secure the Financial Future of Your Loved Ones?

We live in a fast and progressive world, where there are infinite possibilities and so are the uncertainties. New financial options have increased the desire for wealth gain among individuals and have resulted in the rise of inflation. To ensure financial protection for the family and to create a strong financial backup for them, it is important to make a wise financial decision.

A term insurance plan is the best way to provide financial security to your family, specifically if they are entirely dependent on you. A term insurance plan is one of those financial instruments that will keep you rolling in case of an emergency. Moreover, it helps to provide financial protection to your loved ones even in your absence. Read further to know how the term insurance plan helps to secure the financial future of your family.

Offers High Benefits and is Cost-Effective

Purchasing a term insurance plan is very cost-effective and does not create a hole in your pocket. If you are a young policy buyer, then you can buy a policy cover up to Rs. 1crore at a minimum premium rate. The advantage of purchasing high insurance coverage at a nominal premium rate can be gained only in a term insurance plan. Not only are these plans cost-effective but also offer pure protection to the family in case of an eventuality and also take care of the future financial liabilities of the family.

Provides the Benefit to Accumulate Wealth

Along with the benefit of providing financial security to the family in case of any eventualities, the term insurance plan also provides an opportunity to accumulate wealth for future financial objectives. The insurance coverage offered by the term plan can help you forgo the liabilities even in your absence. Moreover, with plans like Term Return of Premium (TROP), you get to avail the benefit of the return of premium as a survival benefit if you survive the entire tenure of the policy.

Provides Financial Protection to the Family

This is one of the prime features of the term insurance policy. As a co-earner of the family, it is an equal responsibility of a woman to ensure that her family is financially secured even in her absence. This objective can be easily achieved with a term insurance plan. The higher coverage amount offered by the term plan ensures that your family is financially secured in case of your uncertain demise. Moreover, the term plan also takes care of the future liabilities of the family and repayment of loans, debt, etc.

Affordable

This is another advantage of a term plan that you get. The term insurance policy offers premium discounts to female policy buyers. This is because, while deciding the premium rates of the policy there are many criteria that are taken into account, and gender is one of them. As per the records, it is stated that females have 5 years more life expectancy than males, thus, insurance companies find female buyers less prone to any diseases. This results in more discounted premium rates for females as compared to males.

Tax Benefit

If you are an earning individual and you come in the tax bracket, then you will fairly understand how vital is the role that tax-saving plays in the process of financial planning. Even though there are many different ways to save tax, purchasing a term insurance plan is one of the most popular options to save tax. The premium paid towards the term insurance plan up to the maximum limit of Rs.1.5 lakh is eligible for tax exemption U/S 80C of the Income Tax Act. Moreover, the survival benefit offered in the term Return of Premium Plan is also applicable for tax exemption U/S10 (10D) of the Income Tax Act.

A Steady Investment Option

It is more than just a plain instrument that offers an assured replacement at the loss of income but also acts as an investment that offers a significant return on the amount of the premium paid, during an active tenure of the policy. As per the choice of the policyholder, several life insurance plans offer considerable returns at the time of maturity. So, it offers dual protection by letting the buyer achieve investment goals and protecting the family from a sudden income loss.

Easy to Understand

One of the most common benefits of term insurance plans is that it is easy to understand. The term insurance does not include different components like savings, investment, etc. in a term plan, the policyholder just needs to pay the premium of the policy regularly and in return, life coverage is offered to the insured for the fixed tenure of the policy.

The Bottom Point!

Term insurance policy offers sufficient coverage at a lower premium rate. It is, however, necessary for an individual to first analyze the requirement considering factors like the cover, age, money, future needs of the family, etc. and then choose the best term insurance plan as per their requirement and suitability.

FAQs
What is the claim settlement ratio of an insurance company?
The claim settlement ratio of an insurance company refers to the total number of claims settled in a year by the total number of claims filed in a year.
What are the factors that affect the premium rate of the term insurance plan?
There are various factors that affect the premium rate of the term insurance policy. Some of these important factors are age, income, gender, smoking habits, health history, occupation, etc.
What are the rider benefits offered by a term insurance policy?
The riders offered by the term insurance policy are:
  • Accidental Death Benefit
  • Critical Illness Rider
  • Income Replacement Rider
  • Accidental Death and Disability Rider
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