Term insurance is a straightforward form of life insurance that offers coverage for a set period known as the "term." Unlike permanent life insurance policies like whole life or universal life, term insurance focuses solely on providing a death benefit to your beneficiaries if you pass away during the policy term, which makes it a cost-effective and straightforward option for life insurance coverage.
Choose Your Coverage Amount: When you purchase a term insurance policy, you'll select a coverage amount known as the death benefit. The amount your beneficiaries will receive if you pass away during the term of the policy.
Determine the Term: Next, you'll choose the policy term. The term lengths range from 10 to 30 years, although some policies offer more flexibility. You should align the period with your financial goals and when your dependents will be self-sufficient.
Pay Premiums: To keep the policy in force, you'll need to pay regular premiums, typically monthly or annual. The premium amount is generally fixed for the term.
Beneficiary Designation: You'll also need to name one or more nominees who will receive the death benefit if you die. Beneficiaries might be family members, friends, or anybody else you want to fiscally safeguard.
Death Benefit Payout: If you die within the period, your beneficiaries will be able to collect the death benefit tax-free. They can use this money to pay for their mortgage, schooling, or daily living expenditures.
Affordability: Term insurance is often the most affordable type of life insurance. Makes it accessible for individuals and families on a tight budget.
High Coverage Amounts: Term policies allow you to secure substantial coverage amounts, ensuring your loved ones are adequately protected
Flexibility: Term insurance can adapt to your changing life circumstances. The policies offer the option to convert to permanent life insurance or renew the term if needed.
No Cash Value: Unlike permanent life insurance, term policies do not accumulate cash value or investments. They provide pure protection, keeping your financial goals simple and transparent.
Tax Benefit: Tax advantages are available for sickness coverage under Section 80D. The lump sum money received as the sum assured/death benefit by nominees is likewise premiums paid under Section 80C and critical illness premiums tax-free under Section 10 (10D) of the Income Tax Act 1961.
Let us examine a few eligible individuals who would benefit from purchasing term insurance policies to safeguard their family's finances:
Young Professionals: Individuals entering the workforce can acquire a policy to enjoy tax benefits and protect their parents from potential financial liabilities.
Newlyweds: Upon marriage, individuals gain a partner to rely on and someone who depends on them. Whether it is a dual-income household or not, purchasing term insurance for both partners is prudent. This policy provides a financial safeway for loved ones during challenging times.
Parents: Expanding one's family brings additional responsibilities. Parents strive to provide their children with every opportunity to fulfill their dreams. Financing their education, hobbies, and future marriages requires careful planning. Parents should consider obtaining a term plan for themselves and their partners to ensure financial stability for their family.
Retired Citizens: Individuals under 65 can still purchase term insurance. Many retirees avoid acquiring a plan, considering it an unnecessary expense. However, the payout from such a policy can empower one's spouse to enjoy their golden years on their terms. As evident, there is always a right and inopportune time to purchase insurance to safeguard the well-being of your loved ones.
Term life insurance is an urgent requirement for a large segment of the Indian population. However, the insurance industry limits the plan's entrance age to prevent insurers from giving risk coverage to the elderly who are at significant health risk. Make a plan for your future today. Buy term insurance for yourself and your loved ones to provide financial security in the now and the future.
Q: Is term insurance covered under 80c
Ans: Yes, you can. Under Section 80C of the Income Tax Act of 1961, you may deduct these premium payments for your term insurance up to a limit of Rs. 1.5 lakh per year.
Q: What are the term insurance eligibility in india
Ans: The minimum age requirement is 18, while the highest age to purchase term insurance is 65. Your premium is affected by your smoking or non-smoking status.