Starting a family with a newborn can be the most beautiful thing you experience as a parent. But with this small family member comes the responsibility of providing a secure life and future for the child. Accumulating enough savings for your family including the monthly expenses, education fees and debts can be difficult in this day and age of high standard of living. A solution to this problem is a term insurance plan that aids in creating a financial backup. Many experts advise people to purchase a term plan as soon as they begin earning as these policies are most affordable at a younger age. So let’s understand why you should consider buying a term policy.
5 Reasons Why You Should Opt For Term Plan
1. Financial Backup
Term insurance is a pure life cover policy giving your family a financial cushioning in case something happens to you. With this cover, your beneficiary can avail a lump sum amount to meet their financial needs and safeguard their future. You can decide the sum assured amount by estimating the future expenses of your family or use a term plan calculator for easier calculation. The sum assured shall play a role in determining your premium rate.
2. Tax Benefits
Investing in a term insurance plan enables you to claim tax benefits on the premium paid and also on the death benefit. The premiums you pay for securing an insurance plan can be claimed under Section 80C of the Income Tax Act, 1961. The maximum cap for claiming income tax deductions is INR 1,50,000. The death benefit received can also be claimed under Section 10(10D) as tax-free. Such tax advantages encourages you to opt for insurance plans.
3. Debt Clearance
As you have started a new family, you will surely purchase a house with the help of a home loan or get a personal loan for other purposes. Such debts will weigh down on your family and deplete the corpus saved up for basic expenses. With the help of a term policy, you can consider your debts when determining the sum assured and plan accordingly. The death benefit received will make sure that your family is leading a stable life along with clearing the debts. To accurately calculate the sum assured needed to suffice your loves ones, use an online term plan calculator available on your insurance providers website. Consider the EMI amount with the tenure of the loan for the sum assured.
4. Peace of Mind
By having a term insurance policy, you can rest assured that your family won’t be left to fend for themselves. With the help of the sum assured, your loves ones won’t need to be dependent on other family members. Your children can still dream to complete their education from a renowned college and won’t be burdened by any of your debts.
5. Additional Protection
Term policies come with the advantage of insurance riders to provide additional protection. These riders grant extra perks that extend over and above the benefits of a term plan. It covers you from unfortunate situations like permanent disability, accidental death and loss of income amongst others and gives financial assistance. Many of these unforeseen conditions are not included in your base term plan which is why you can purchase add-on riders.
With the above reasonings, you have now learnt the significance of term insurance and how it can be beneficial in the future. As the sum assured plays a vital role in an insurance policy, you need to make sure the death benefit will cover the financial expenses of your family. You will find multiple term plan calculators online that will assist in estimating the required amount to safeguard your loved ones.