7 Reasons why you should purchase Term life insurance today
With uncertainty being a part of everyone’s lives, the importance of purchasing a life insurance policy to secure the lives of your dependents cannot be understated. The primary purpose of all life insurance policies is to provide financial security to your dependents in case something untimely happens to you. Life insurance plans come in a range of different types, and policy buyers can pick a product type as per their needs. However, if you are looking to purchase a policy with a large life cover without having to pay a high premium rate, a term insurance policy is your best bet.
What is term insurance?
Term insurance is the most basic form of life insurance coverage. When you purchase a term insurance plan, you receive coverage for a specific policy tenure, usually ranging between 5 and 40 years. During this policy term, if the policyholder happens to meet with an untimely eventuality, a death benefit will be paid out to the beneficiary.
Since term insurance policies do not acquire a cash value during the policy term, they are typically offered at a lower premium rate than other life insurance products. However, this also means that you, as a policyholder, will not receive any maturity or survival benefits. That being said, most insurance providers do offer riders along with term insurance policies. Thus, if you wish, you can purchase a rider and increase your coverage. In order to purchase a term insurance policy, the policy buyer will usually have to be over the age of 18 years.
Why you need to purchase term insurance
- Income Replacement:Several households still function on a single individual’s pay. In such cases, it becomes extremely important to purchase a term insurance policy to secure the financial well-being of one’s family. In the event of the policyholder’s death, the insurance provider will offer a death benefit payout to the nominee, which can be used by one’s family to pay for any financial expenses that might arise. Insurance providers also offer term insurance plans with multiple payout options. Thus, policy buyers can opt for a payout option that will best suit their family’s needs.
- Competitive Pricing:Term insurance policies are usually offered at a lower premium rate than other life insurance products since they don’t acquire a cash value. This makes term insurance policies an ideal choice for people who have just started working or those with unstable jobs.
- Protection against Liabilities:Most people, these days, have loans and credit cards debts. In such cases, it becomes extremely important to purchase a term insurance policy with an adequate payout to ensure that your nominee is able to clear your debts in case something untoward happens to you.
- Simplicity:Term insurance policies are extremely simple and easy to understand. Since they are purely protection-oriented, there is no savings or investment component involved in the policy. Thus, the entire premium that is paid by the policyholder goes towards maintaining the life cover, with no additional charges being levied.
- Tax Benefits:Term insurance policies, in addition to providing a risk cover against death, also serve as a tax-saving instrument. Thus, policyholders can claim tax deductions under Section 80C of the Income Tax for the premiums that they pay towards their policy. Also, the payout that your nominee might receive is also eligible for tax benefits as per Section 10(10D) of the Income Tax Act.
- Multiple Purchase Channels:As a policy buyer, you can choose to purchase your policy through online or offline channels. Thus, you can purchase the policy through the insurer’s official website, via trusted third-party insurance websites, or through the nearest branch of the insurance provider. You can also choose to read through the policy brochure and compare the features and benefits of various policies online before purchasing a particular plan.
- Changing Lifestyles:As a result of certain lifestyle choices, the chances of one being diagnosed with a lifestyle disease or a critical illness are quite high. It is not uncommon to hear of 30-year olds suffering from serious heart conditions. Thus, in order to keep your family protected, it is advisable to purchase a term insurance policy with an adequate sum assured without delay.
Purchasing a term insurance policy is not something that you should put off if you wish to ensure that your loved ones are financially secure regardless of what may happen in the future. However, before you purchase a policy, it is vital to compare the benefits and prices of various policies to ensure that you are paying a fair price for the coverage that you receive.