In today’s day and age, when one’s lifestyle is increasingly including purchases of high cost and value, financial security is a must for every family. One good way to solve this problem is to adopt a term insurance plan. The global transmission of infections in the last few years has opened our eyes and pointed out how vulnerable our lives are. Keeping such kinds of uncertainties in mind, a 1 crore term insurance plan can be your weapon to fight future uncertainties. But how to choose the best term insurance plan? Read on to choose your ideal one within your budget.
Understanding Term Insurance
A term insurance plan promises to provide life coverage for a certain period. In case of the unfortunate demise of the policyholder before the term ends, the beneficiaries will receive the assured sum. Term insurance has a clear advantage over the rest of the plans because the former protects you from all risks and does not require any savings or investment.
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Benefits of a Term Insurance Plan
Term insurance has the basic advantage of providing financial security. The following are a few benefits one would have by owning a term insurance plan:
- Financial Protection: The plan is your family’s safety net covering daily expenses, help you replay all debts, and take care of all future financial goals. .
- Affordable Premiums: The uniqueness of term insurance is that it ensures more coverage at lower premiums. Therefore, it is affordable for a larger section of the people of the society.
- Tax Benefits: If you are paying your premiums for term insurance, you are eligible for tax deductions. Section 80C of the Income Tax Act confirms the same. Section 10D of the same Act further ensures that the death benefit of the policyholder is also exempted from tax.
- Flexibility: You have the freedom to choose your riders and premium payment cycles.
Tips to Implement When Choosing a Term Insurance Plan
With a one crore term insurance plan, you can have access to sizable coverage, that too with a reasonable premium. With this plan, you can establish a sense of financial security as the amount is sufficient for you to go for expenditures such as your children’s education, mortgages, and even daily expenses. You can ensure that even in your absence, your family maintains a normal lifestyle.
Below are a few tips for you to consider if you want to choose the best term insurance plan.
1. Assess Your Coverage Needs
The first and foremost step is to foresee your future and understand your goals. Your goals may include your child’s higher education, outstanding loans, and all other long-standing financial commitments that you may have. The plan should have a coverage amount that is enough to meet your expenditures in the future. There is a handy tool, called term insurance calculator, that can give you a rough estimate of what kind of coverage you would need (based on your profile).
2. Compare Premiums
There is no doubt that affordability plays a key role here. However, one should not choose a policy based only on this parameter, as the cheapest plan might not always be the best policy one would have. You should do a bit of competitive research. Factors like the claim settlement ratio of the insurer and how good is the plan’s customer service record – play a crucial role in making the most correct decision.
3. Understand the Policy Terms
Terms and conditions differ between various term insurance plans. Look into their policy term; what are the options they have for premium payments; do they have any limitations? Some plans come with flexible cycles of premium payments allowing you to choose a custom plan according to your convenience.
4. Evaluate Riders and Add-ons
Riders give you extra protection by providing additional coverage that comes with your life insurance plan. When do you need them? They can provide coverage at the time of any critical illness or can help waive of premium payments. The idea is to stay within your affordable premium range, but at the same time, choose the ones that can give you an extra bit of security.
5. Check the Insurer's Reputation
Be careful in choosing your term insurance plan. You need to carry out thorough research on the claim settlement ratio of the insurer, which denotes how often claims are settled against the claims received. If the ratio is high, it means the claims are effectively settled.
How to Use a Term Insurance Calculator?
As mentioned earlier, term insurance calculator is a handy tool to make an estimate of the coverage that you will get and the premium you have to pay against a chosen plan.
- Input Personal Details: You need to provide your personal data, like your age, gender, annual income, and smoking habits.
- Select Coverage Amount: Select your coverage amount – 1 crore.
- Choose Policy Term: Duration of the coverage – input the same.
- Review Premiums: Based on the data you provide, the calculator will show an estimate that will help you make an informed decision.
If you are desperate to safeguard your family’s financial future, choosing a one crore term insurance would be an excellent decision. Before you pick one, consider what kind of coverage you are looking for, what premiums you are comfortable paying, what the terms and conditions of the policy are, and the reputation of the insurer.
Maintaining the peace and happiness of the family is the first responsibility of any individual, and a term insurance plan is a prudent step toward that. It gives you and your family the much-needed confidence to live lives to the fullest. One wise decision to buy a 1 crore term insurance plan may satisfy your family’s dreams and aspirations, despite the uncertainties of life.
** Tax exemptions are as per applicable tax laws from time to time.
Note - This article is written by Brand Desk.