We always want the best for ourselves and our loved ones, which is why we work hard to achieve that goal. As life can be uncertain, it is essential that we take steps to safeguard our family’s future. Financial security is a major determinant of quality of life and we need to ensure that our loved ones have adequate funds even when we may not be around to take care of them. There are various ways to achieve financial independence for your partner and family and one of the best options is term insurance. Here’s how a term life insurance policy can work to protect your family from financial risks.
- Sum assured: The beneficiary, as stated in the policy, will be eligible to get the Sum Assured in the event of death of the insured. This will help ensure financial stability for the family. The Sum Assured linked to the term life insurance policy will also work to reduce any stress related to financial uncertainties. Research studies have shown that financial issues can be a major contributor to stress and anxiety. With the Sum Assured, the family can maintain their existing standard of living, provide for educational needs of children, arrange funding for marriage of young adults, and take care of health of family members.
- Affordable premiums: Premium paid towards term insurance is quite affordable and can easily fit within your budget. You can also choose the frequency of paying the premiums, which can be monthly, quarterly or annually. The premium amount will vary depending on various factors, one of which is the term of the insurance plan. Term life insurance policy can be taken for up to 99 years, so you can decide the term that best suits your specific needs. If you feel your financial liabilities will reduce after a specific number of years, you can take a term plan for a shorter duration. This will effectively reduce the premium amount. With affordable premium for term plan, you don’t have to compromise your present.
- Tax benefits: With a term plan, you can also save tax. Premiums paid towards a term plan are eligible for tax deduction of up to Rs 1.50 lakh annually. This is available under Section 80C of Income Tax Act, 1961. However, tax benefits should not be your sole concern when taking a term insurance plan. You should get a realistic estimate of the funds that your family may need in the future. Banks and financial institutions usually offer financial calculators that you can use to calculate the right amount of Sum Assured and the term period for your term life insurance policy.
- Premium repayment: Usually term insurance plans do not have the provision to return the premiums paid in case the insured survives the term plan. However, some financial institutions provide facility of premium repayment, which can be very beneficial for you and your family.
- Additional protection: The sum assured is available in the event of death of the insured, but what happens if an individual faces accidental disability or is diagnosed with serious diseases such as cancer, heart disease, etc.? Such circumstances can also affect the finances of the family. This is why it is recommended that you should take additional protection along with your term insurance plan.
People usually think that term insurance is for married couples only. However, this is not true. Term insurance is applicable for anyone who has financial dependents. For example, unmarried adults with financially dependent parents can opt for term insurance. So, if you have financial dependents, make sure you take a term life insurance policy. It is a wise thing to do and necessary for securing the financial independence of your loved ones.