Our lives and the events happening in our lives are forever unpredictable. It can be prone to a harsh misfortune or critical illness that can instantly influence your economic stability. If the sole earning person in a household suddenly expires, the deceased's family members may experience some significant financial crisis.
The savings which the dependants possess may not prove to be sufficient to meet all their financial needs. Hence, under any such circumstances, a term or a life insurance plan can be beneficial. A term plan is a life insurance policy that individuals can purchase to safeguard their own life. A fixed duration and sum assured are always defined under the term plan. A term insurance policy guarantees this financial protection and sustains the family members to dispense with the financial loss if the earning member of the family dies untimely.
This collective sum provided by the policy provider can assist the dependants in setting off all the liabilities left behind the departed person and lead a well-disposed life.
Buying a Term Plan: A Good or Bad Idea?
A term plan extends insurance cover in the form of the mortality benefit to the nominee of the policy in case of unpredictable death of the insured individual. In the current times, buying a term plan is a great decision and has become essential because a term life insurance plan guarantees a secure and guarded financial future for people and their loved ones.
Along with financial protection to a person and his loved ones, a term insurance plan has plenty of other advantages like reasonable premium charges, additional rider advantages and copious more. This is what makes term plans a good investment option in tough times.
Here are some of the advantages of buying a term plan:
1. Huge Sum Guaranteed with Economic Premium
A term insurance plan is the most simple and purest form of an insurance policy. The most significant advantage of investing funds in a term plan is its ability to be pocket-friendly. Compared to many different life insurance policies, a term plan unquestionably holds the most economical premium amount.
Apart from this, one important thing that people must always bear in mind that it is always better to invest funds in a term plan at an early age. The main reason behind purchasing a term plan early is because the earlier you start investing in a term plan, the lesser premiums you will be obligated to pay and the higher the coverage amount.
2. Enhanced Flexibility and Reduced Losses
Another advantage of investing in a term plan is because these plans are highly flexible. In addition to this, it is more manageable for individuals to opt out of a term plan than an insurance policy based on the capital value.
Suppose a person is not in a situation to pay their premium instalment on time. The term plan will automatically be terminated after the grace period, and there will be no additional adjustment needed on the part of the insured person.
This makes it different from a capital value policy. The breach of premium payment will result in a significant loss as the banks, or the insurance provider will make various deductions even after termination.
3. Tax Benefits
A term plan further provides tax advantages within two distinct sections of the Indian Income Tax Act, 1961. A person purchasing a term plan will receive tax exemptions on the policy premium amount under Section 80C.
Furthermore, a person holding a term plan will also be eligible to receive maturity advantages under section 10 (10D) along with receiving exemptions on Return of Premium Plan (TROP).
4. Additional Rider Advantages
Buying a term plan can provide you with multiple additional rider benefits. You can easily choose a rider and opt for it as an add-on to strengthen your term plan and that too at the most nominal increment on the premium amount.
However, you must note that these additional rider benefits can vary from one insurer to another. Therefore, it is always advised to check all the terms and conditions related to the additional rider benefits mentioned in the policy and then make a prudent determination.
5. Terminal Illness Cover
People may undergo any critical or severe illness at any stage in their life. The medical treatment expenditures incurred towards these critical ailments could quickly drain all a person's savings. Hence, it is essential to be financially ready for such situations.
Suppose you have recently been diagnosed with a critical disease or think you might suffer in the future due to genetic history. In that case, it is always advisable to opt for terminal illness cover on your term plan. This terminal illness cover is readily provided with a term plan with a minimum premium increment, and it is always advisable to add this cover in a term plan.
With a far-reaching variety of term plans available in the modern market, people can always purchase a term plan that fits their specifications and requirements. A term insurance plan is the most dependable to guarantee that you and your family hold sufficient monetary coverage to tackle life's predicaments.
You can use an online term insurance calculator to ascertain the specific amount of term plan premium they will be expected to pay for the chosen plan.
Canara HSBC Oriental Bank of Commerce Life Insurance is a leading financial institution that grants the best term plans with various benefits like complete life cover till 99 years of age. Their iSelect Smart360 Term Plan is deemed one of the most commendable term plans that comprise affordable premium rates, flexible premium payout, comprehensive coverage, and presenting people with an option to cover their spouse in this term plan.