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Why Term Insurance is Crucial for a Family’s Breadwinner
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Term Insurance is a protection plan and one of the simplest forms of Life Insurance. It provides basic Life Insurance coverage to safeguard your family, particularly if you are the primary breadwinner. While Term Insurance insures your life, it also offers financial security for your loved ones in the event of your death. However, this is not the only reason you should consider Term Insurance. Let's explore the different reasons why you should consider investing in a Term Insurance policy.
Benefits of Getting a Term Insurance Plan as the Family’s Breadwinner
Here are the benefits of investing in a good Term Insurance policy.
1. High Sum Assured at an Affordable Premium
A Term Insurance plan is available at an affordable cost, with a premium that is budget-friendly and reasonable. Additionally, purchasing Insurance at a younger age can result in lower premiums.
2. Strengthen the Policy with Additional Riders
Improve your basic Term Insurance coverage by adding riders to your plan. There are various types of riders available, and you can choose one that best suits your needs. Keep in mind that these riders require an additional premium but provide significant benefits, including potential tax deductions on the rider premium.
3. Death Benefit Payout Options
If you are paying off a loan or mortgage, your family may have difficulty managing the payments in the unfortunate event of your death. In this situation, the responsibility would fall on your family. This is where the death benefit payout option comes into play.
Your dependents would receive a lump sum payment after your death, which would help them handle any financial obligations. Some policies also offer the option of a monthly income in addition to the lump sum death benefit. With this option, your family would have a way to cover their expenses and find the monthly payouts to be beneficial in the long run.
4. Income Tax Benefits
Term Insurance plans offer excellent tax benefits. The premium paid for a Term Insurance plan is tax-deductible, while payouts are completely exempt from taxes under Section 80C and Section 10 (10D).
5. Return of Premium Option
A Term Insurance plan provides a payout for the nominee after the insured's death, but it typically does not offer benefits upon maturity. However, you can receive benefits if you opt for the return of premium option. This choice requires you to pay higher premiums but provides a full refund of premiums paid on the maturity of the policy. It is important to note that the total sum returned will not include levies, taxes, modal amount, and rider premium.
6. Critical Illness Coverage
Term Insurance plans also offer critical illness coverage, in which the insured receives a lump sum payment in case of any of the critical illnesses are detected as per the policy terms and conditions. This benefit is only available to the insured individual.
Summing Up
Term Insurance plans not only provide financial security for the insured but also protects the family. In the event of untimely death, the family will not be left without support. It is important to choose a Term Insurance policy from a reputable provider to ensure easy claim processing.
FAQs
Q1. When should I buy a Term Insurance plan?
You should consider getting a Term Insurance plan as soon as possible. Your age does not have a significant impact on the benefits of the plan, but purchasing a policy at a young age offers lower premiums, longer coverage, and a higher sum assured.
Q2. How to pick the right Term Insurance plan?
You can choose the right Term Insurance plan by understanding what you want your plan to cover. Then, start searching online to find out which provider offers the best solution as per your needs. If a standard plan does not meet your needs, consider adding additional riders for extra coverage. After carefully examining the terms and conditions, as well as all the additional benefits, you can make your choice and invest in a policy that gives you peace of mind, knowing that your family is protected in case of your death.
Q3. Does the Term Insurance plan come with maturity benefits?
Term Insurance usually is a pure protection plan that does not offer maturity benefits, except for certain return-of-premium plans. If you are specifically seeking maturity benefits, you will need to review and compare policies to find policies that include them.
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