The need and demand for health insurance and life insurance plans have increased significantly, especially after the onset of the Coronavirus (COVID-19) pandemic. The cost of hospitalization is taking a toll on people’s pockets. At the same time, many have lost their lives due to this deadly virus. Therefore, people have started realizing the necessity of having health insurance and life insurance plans.
As you never know what the future holds for you, it is advisable to be prepared for all the possible challenges. When talking about securing the future of your loved ones, purchasing a term insurance plan can be an ideal option.
Term insurance plans in India are purely life insurance policies that offer a high sum assured at affordable premiums. Here, the insurer pays the death benefits to your nominees in case of your untimely absence within the tenure of the plan. The death benefits are tax-exempt as per Section 10 (10D) of the Income Tax Act, 1961.
If you plan to buy a life insurance term plan, keep these four points in mind:
- Substantial sum assured
The primary purpose of buying a term plan is to provide your loved ones with financial protection even if you are no longer around. Therefore, while purchasing term insurance plans in India, it is recommended that you opt for a high sum assured to help your loved ones fulfill their monetary aspirations when you are not there to take care of them. The sum assured should be adequate to cover all your liabilities like house loan, car loan, education loan, and personal loan. You must calculate the total amount of all these obligations, the money needed for daily household expenses, and your family’s financial goals to determine the sum assured.
- Timely payment of premium
Never miss on the premiums you pay towards your term insurance plans to ensure continuous coverage. One of the best things that you can do is select an Electronic Clearing Service (ECS) payment alternative, wherein the premium will be directly debited from your bank account on the date set by you with the term insurance company.
- Nomination
There is no point in buying term insurance plans if you have not selected a suitable nominee. The nominee of your policy should be someone who looks after your family during your absence. Besides this, choose a nominee who is relatively young, responsible, and someone from your family. Your policy’s nominee must have a clear idea about your family’s financial objectives.
- Self-service facility
Most insurers offer self-service, which allows you to manage the policy right from the comfort of your home. For instance, if you want to add a rider to your policy, you need not visit the insurer’s office, as you can do the needful online. By doing this, you can follow social distancing successfully.
Term insurance plans are priced economically, offer high sum assured, and provide tax deductions under Section 80C and 10(10D) of the Income Tax Act, 1961. According to Section 80C of the Act, the premium that you pay for a term insurance policy is tax-free up to a maximum amount of INR 1.5 lakh per year.
As you know, prevention is always better than cure. So, do not waste your time and invest in a term plan as soon as possible. Today, times are uncertain, and anything unexpected can happen. So, provide the much-needed monetary stability to your family members to make sure that they can live a financially independent life even if you are not there for them.