The birth of a child, though a very joyous occasion, ushers a new set of duties and responsibilities for the new parents. Besides their moral responsibility towards proper upbringing, parents are also vested with the financial responsibility of providing for their child. When it comes to children, raising them can be an expensive affair, especially given the cost of tuition fees in schools, their lifestyle expenses, wedding expenses, etc. Regardless of whether one or both parents are income earners, having a term insurance plan is an absolute must to ensure the best future for the child, especially if one or both parents happen to suddenly pass away.
Speaking of term insurance, it is undoubtedly the most popular type of life insurance available in the market. Its popularity rests on a number of reasons, such as easy affordability, and the high degree of cover it provides. A term plan typically provides cover for a fixed amount of sum assured for a fixed time period, at nominal premiums. In case of the death of the policyholder, the nominee gets the sum assured benefit amount, which can help them take care of future needs, which includes children’s upbringing expenses.
Benefits of Term Insurance
- Tax benefits – Investing in a term plan is also accompanied by attractive tax benefits. Policyholders can avail tax benefits on the premiums they pay towards the policy up to a limit of Rs.1,50,000. Nominees can also avail tax benefits on the sum assured which they receive under the policy as per the provisions of the Income Tax Act, 1961.
- Affordable premiums - It is a commonly known fact that term plans are one of the cheapest forms of insurance. Also, if purchased at a young age, they can be even cheaper. This is simply because, the earlier you buy the plan, the cheaper you can get it for, considering the lower risk that is associated with young age.
- Get it online – Purchasing your term insurance plan online will afford you many benefits. You can get the same plan at lower premiums, manage your policy easily, pay your premiums online, renew your policy online, and access to the policy document anytime.
- Flexible premium payment – When it comes to premium payment, policyholders usually have multiple options that they can choose from, depending on their financial capability, and convenience. Insurers usually allow premium payment in a variety of modes such as single-time payment, or in regular instalments (monthly, quarterly, half-yearly, or yearly.
- High amount of cover – Term plans are popular for providing a high amount of cover to your loved ones, at very reasonable premiums.
Guide To Purchasing Term Insurance
- Evaluate your family’s requirement and your financial situation before deciding on the policy coverage amount.
- When deciding coverage, the most recommended rule is to have a sum insured that is 15x to 20x of your yearly income.
- Before you purchase a plan, go online and compare different plan to decide which one offers the best all-round deal.
- Consider purchasing a plan which also offers add-on riders that you can buy to enhance the plan’s coverage.
- Most importantly, make sure your nominee knows that you have purchased a term plan.