In times of crisis, term insurance plans act as a savior by providing financial protection to the dependents of the deceased. This helps the dependents tackle any adversities that may come upon them.
Under a Term Insurance Plan, in case of the unfortunate death of the policyholder, the benefit of the policy is paid to the nominee.
Term plans offer financial protection against untimely death, which is classified into various categories by insurers. Based on the type of deaths, which is included in the policy or not, the insurance company declines or pays the death benefit to the policyholder’s nominee.
When planning to buy an insurance cover, the policyholder will have to deal with several variables: such as age, tenure, current health, benefits he/she wants at maturity, etc. The pay-out of a term insurance policy can be chosen by the policyholder while buying the term insurance policy, which can be either in monthly installments, lump-sum, or both.
Here is a guide to help identify the term insurance plan that is right for you;
The number of dependents the policyholder currently has needs to be mentioned, as in who all will need the insurance money if something were to happen to the policyholder. For younger policyholders, with no personal liabilities, their term insurance plan may be able to support his/her parents or an earning partner. However, if there are parents as well as a family to look after, these factors should be included while buying the insurance cover.
The policyholder needs to calculate his/her income, the expenses of the family members, the cost of education for children in the family, etc. while deciding the sum assured. Also, policyholders need to account for inflation.
Factor in Age
While determining the premium payable, the age of the policyholder plays a key factor. The older the policyholder gets, the higher his/her premium cover goes per year. Hence, to catch a lower premium, try to buy insurance at an early age.
While coming to a conclusion about the insurance premium, the policyholder should consider his/her current monthly income and expenses. Experts say the policyholder should be comfortable making the premium payments, without stress his/her finances.
Policyholders can avail tax benefits under Section 80C of the Income Tax Act, 1961. A deduction of Rs 1.5 lakh from taxable income can be availed by the insured.
Tenure of policy
Policyholders buying insurance at a later stage in his/her life should be careful with the tenure of the policy.
Experts suggest the insured should make sure that he/she will be able to carry on paying the premium of their life insurance term policy after growing expenses and at the later stages of his/her career.
Main Source - Financialexpress