Term insurance is a great option for people to provide financial protection to their family. Hence, it is essential for individuals to get term insurance to secure their family’s future.
Read on to know how term insurance protects the insured person’s family.
Term life insurance plans provide life cover to the policyholders. The sum assured offered by these policies can be provided to the nominees of the policyholders in case of an unfortunate situation.
For instance, if the insured person dies when the policy is active, then the insurance company offers the nominees with the life cover amount. This cover is provided for a specific duration. During this term, the policyholder needs to pay regular premiums.
One of the most important factors that affect premiums is the age of the policyholder. For instance, a person in his/her 20s might have to pay lower premiums compared to a person in his/her 40s. Thus, it is recommended to buy a term plan at an early age. Term plans can also provide enhanced coverage if the policyholders purchase add-ons like accidental death benefit, critical illness add-on, etc.
How to Decide the Life Cover Amount?
The life cover amount is the amount the nominees can receive if the policyholder passes away during the policy term. Hence, it becomes very crucial to select the right cover amount. If the cover amount is low, then the nominees might have to face a financial burden.
There are various factors to consider when deciding the cover amount. Some of them are-
- Current Income
- Current Expenses
- Future Goals
Let’s take at how to secure family’s future with term insurance-
How Term Insurance Protects the Family of the Policyholders-
- Financial Protection
One of the most important benefits of term insurance is that it offers financial protection to the policyholder’s family. The death benefit paid in the event of the policyholder’s passing can be used to lower the financial burden. Hence, it is crucial for securing policyholder’s dependants, such as children, spouse, etc. The payment can be made in a lump sum or periodically.
There are term plans that change their features over some period. For instance, a policyholder can opt for a decreasing coverage option. In case of this plan, the cover will keep decreasing over the policy duration.
This plan can be very helpful if the policyholder has debts to repay. Since the debt amount tends to decrease over the loan tenure, the financial protection against this debt can also be lowered. There are also plans that offer increasing coverage option. This can help in tackling inflation.
- Tax Benefits
The premiums paid by the policyholder is eligible for tax deduction under Section 80C. The limit is Rs. 1.5 Lakh.
- Additional Coverage
A policyholder can also opt for additional coverage by paying an extra premium. Add-ons like accidental death benefit, critical illness benefit, etc. can enhance the policy. There are policies that allow top-ups to increase policy coverage.
Term Insurance for Financial Protection
Term insurance is critical for providing the dependants with financial protection. Hence, it is important for every earning member to get term insurance for their family.