It is prudent to create adequate wealth to secure your family’s future, especially in a situation where you are no more to support. Securing your loved ones with insurance plans is a wise step and there are many types of plans available. You can opt for (from various insurance plans) to safeguard their interests. One such plan is a term plan that works on the simple principle where you pay the premium and get covered for a predetermined period.
What is a Term Plan?
The term plan is a is a pure death benefit policy that gives life cover to the insured against his/her premature death. The nominee gets the corpus in a lump-sum payout. It is a popular insurance product and is quite affordable in terms of premium payments. You get a good sum assured even after paying a conservative premium, making the term plan an affordable insurance option.
However, it must be noted that a term plan does not come with a maturity benefit. This means that the sum assured will be paid to the nominee only. If the insured outlives the plan tenure, there will be no payout. But, it acts as a safety net for your loved ones who can manage their living expenses in the unfortunate event of your death.
How are Premiums Decided?
The premium for your term plan depends on following factors:
Age: The younger you are, the lower the premium you pay.
Gender: A few companies offer discounted premiums to women. This is because a few studies that show a lower death rate in women.
Sum Assured: Like any other insurance product, the higher the sum assured, the higher the premium amount.
Lifestyle: The lifestyle choices of the insured also have a bearing on the amount of premium paid. An insurance company will charge more premium from a smoker than a non-smoker.
Term: Term is an important factor that affects your premium. Longer durations will require higher premium payouts. Most insurance companies issue term policies for a duration of 5 to 40 years or till the insured reaches the age of 99.
When Should I Buy a Term Plan?
Ideally, you should buy a term plan as soon as you start working and there are so many reasons for this. In fact, anyone between the ages of 18 to 65 can opt for term insurance. However, your 20s is a good time to get into the insurance market and plan for your family’s future. Generally, people start earning in their 20s. As the product comes with a high sum assured amount with low premiums, term insurance is a good option right at the start of your career.
People starting their careers have a stable income and are healthy, therefore, insurance companies prefer these young and healthy individuals when it comes to providing insurance. Also, these young and healthy enjoy lower premiums than their older counterparts.
Benefits of Term Plan
Since the basic premise of a term policy is to secure your family’s regular income in your absence, you can live a stress-free life knowing that there are enough resources for them to live a good life. Also, the premiums paid under a term plan are exempted under section 80(C) of the Income Tax Act up to 1.5 lakhs. Another tax benefit of the term insurance policy is the death benefit received by the nominee, which is also tax-exempt under section 10(10) D, only if the annual premium is less than 10% of the total sum assured.
A term insurance plan gives long-term benefits to the insured and their loved ones at a very affordable cost. Everybody from young professionals and newly married couples to even working parents should opt for a term plan.
To better understand term plan or if have any questions, then please call us at 9818510748 or leave your contact info over here: https://www.gcservices.co.in/contact-us.php
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