The Long Read
Everything you *need to know* is right above this. Scroll down, only if you'd still like to read more (honestly, why?)
Term insurance is the simplest form of life insurance that helps you ensure your family will be financially secure even if you pass away unexpectedly.
Here's how it works:
Now even if you are no more, your family will have a safety net that will help them overcome any financial struggles in your absence, especially if they are financially dependent on you.
If there are family members who are financially dependent on you, you will not want them to suffer financially after your demise.
Term insurance will help you ensure your family can meet their regular expenses, pay off debts if any, enjoy a certain standard of living and life, and fulfil all their life goals.
Let’s see an example of how -
Say, you have bought a house with a home loan
But before paying off the outstanding loan, you pass away suddenly
A term policy will pay your family a lumpsum insurance money after your death
They can use it to pay off any financial liabilities like the home loan while meeting their expenses and maintaining their standard of living
Simple! The best time to buy term insurance is when you start earning.
Even if your salary is a little low, you will be able to afford it because term insurance premiums will be very affordable given your age.
And that brings us to the next recommendation - Always buy term insurance early in life.
As you grow older, you are more likely to have a lot more health issues and poor lifestyle habits. Result: Your term insurance premium amount will increase.
By buying term insurance early, you can save big bucks on premiums!
Absolutely not! Term insurance is actually the least expensive way to secure your family’s financial future. You can get a life cover of ₹ 1 cr for as low as ₹ 500 per month - it costs less than having dinner at a nice restaurant!
Don’t let this myth keep you from buying term insurance. Do your own research to see how affordable term insurance can actually be.
That’s great! It’s good that you are growing your wealth through savings and investments. But for your financial plan to actually materialize, you will have to keep investing. If you pass away suddenly, your plan will crumble.
Result? Your family will be in a financial crisis because you have not accumulated adequate wealth by the time you pass away. This is where term insurance comes in useful.
It is the backup to your financial plan that will help your family live life on their own terms in your absence. This is why you need to buy term insurance over and above having a financial plan.
Ok, no problem! Your life, your choice.
But think about it this way, even unmarried people have loved ones they want to take care of, right? So even if you don't have a spouse and children, you may have other family members financially dependent on you. Your parents, especially if they have retired. Your siblings. Or any other close family member. What happens to their financial security in the event of your unexpected demise?
A term plan can help you secure their financial future. You got your answer, right?
Well, you should buy term insurance to secure your family’s financial future in your absence. But the tax benefits that come with your term plan are an additional incentive.
These are the tax benefits you can get with term insurance:
Deductions under Section 80C - You can get deductions of up to ₹ 1.5 lakhs under Section 80C, for the premiums you pay towards your term insurance
The benefit under Section 10 (10D) - In the event of your death, your nominees receive the insurance money which is completely tax-free
Section 80D - You can also avail of a tax deduction of up to ₹ 25,000. This means you’ll be paying lower taxes! But remember, you only get this benefit on the premiums paid for a term plan with additional benefits like a critical illness rider
So yes, if you are planning to save some tax AND secure your family financially, you should consider buying term insurance.
Your father did the smart thing and got term insurance to protect his family. God forbid, if something happens to him, you and your family will now be financially secure.
But what will the situation be after his death, especially if you become the only earning member of your family? That’s why you too need term insurance so that your remaining family members stay financially secure in your absence.
Of course! It keeps your family financially secure in your absence.
Even if you do not die (yay for that!), it will bring you peace of mind knowing your family will be taken care of even if you are no more.
See, they will mourn your sudden demise. But imagine them facing financial struggles on top of that! You wouldn’t want them to be in this situation, right?
You can gift your loved ones a lumpsum insurance amount by paying really low premiums. Isn’t that absolutely worth the cost? We think so too!