Is Buying Term Insurance a Good or Bad Idea?

Accidents and illnesses happen unplanned. There is no way to predict what the future holds and the only thing you can do is to make sure your loved ones are financially safe, even in your absence. Term insurance can help you with this. At a very nominal cost, they protect the people who matter the most to you in a stage where you can’t protect them.

What is a term plan?

A term insurance provides the insured’s nominee financial cover in the case of an untimely death of the insured. There are different varieties of term insurance available today and the final choice comes down to your preferences and affordability.

Why is term life insurance important?

Term life insurance protects your family against the biggest uncertainty in life. If an earning family member expires, it could come with a lot of expenses and liabilities. There could be a house loan that is still being repaid, there could be debts to repay – a term loan could help a family in need tremendously.

Benefits of term life insurance

Apart from the huge security it provides to a family, term insurances come with some added benefits as well. Let’s take a look at some of them

1)Lower premiums – Life term insurances tend to have a lower premium than any other insurance policies. It is because there is no investment involved here. The policy will lapse at the end of the term period, but the premiums tend to be low enough to mitigate that.

At the same time, even with a lower premium, the financial protection it gives to your family would be very high. The sum guaranteed tends to be more than adequate for a family to be able to survive financially in case of an untimely loss.

2) Flexible plans – Term life insurance plans come in all shapes and forms. You can choose one that is affordable for you or you can choose a plan with a highsum that you think is needed to protect your family financially.

3) Flexible tenue – Term life insurances come with very flexible tenures. Shorter tenure plans help you protect your family for periods as short as ten years. These plans are ideal if you have a home or a personal loan that you are repaying for a certain period of time. This will ensure you don’t leave your family stranded financially if something unfortunate happens to you.

4) Tax benefits – There are term insurance tax benefits in the old and new tax regimes. In the old tax regime, you can avail tax deductions upto Rs.1.5 lakh on premiums. In the new tax regime, premiums are not tax deductible, but the maturity amount is tax free.

4) Riders – Term life insurance plans have a lot of riders that you can add to your main plan. Some of them are –

1) Accidental Death Rider – This rider gives the beneficiary additional financial coverage if the insured expires in an accident.

2) Family Income Benefit Rider – This rider pays out the deceased’s family a monthly income for a certain period of time.

3) Critical Illness Benefit Rider– This rider gives the insured financial coverage if the insured is diagnosed with a critical illness that is pre-specified in the policy.

How to buy a term life insurance plan?

You can buy a term life insurance online and offline. The offline process is to approach a broker and buy a plan through them.

In the online process, all you need to do is find a broker or an insurance provider website. Most of these websites have an easy-to-understand registration process.  There will also be advisory available to help you figure out what works for you. Most online websites offer less or no broker fees compared to the offline process.

In a lot of ways, a term life insurance is a must have. It gives you peace of mind and it will help you protect your family even in your absence. If you don’t have a term insurance yet, it is advisable to get one as soon as possible. All it takes is a few minutes and your family will be secured financially.