Viren Shah, an IT consultant has three dependants including his wife and parents. Though his annual salary is sufficient to look after them. However, it is their future that bothers him. Since Viren is the only bread earner in the family, he is worried about the amount of financial burden they may have to go through in the event of his death. In order to alleviate this risk, he intends on purchasing a life insurance policy.
With the large number of life insurance policies that exist, Viren wants to select an insurance policy that suits his requirements the best. Life insurance policies are majorly classified into whole life insurance plans, endowment plans, term plans, unit-linked insurance plans, and moneyback plans. On purchasing any of these products, he can avail of tax benefits which are up to Rs.1 lakh under the Income Tax Act, 1961 of Section 80C.
Out of all the insurance plans, it is a term insurance plans that will work best for Viren. This is because it provides a cost-effective cover at a low premium for him. In case of a term insurance, the insured is required can choose to pay premium on a quarterly, bi-annual or annual basis. The insurance provider pays the sum assured in the event of premature death within the term of the policy.
Here are five reasons you should purchase a term insurance plan:
One of the most important features of a term insurance plan is that it extends financial security to your family members in the event of your untimely death. Ensure that you revise the term plan as years roll by in order to meet the altering needs.
Another highlight of a term insurance plan is that it offers relatively lower premium in comparison to other life insurance plans. It is possible for a 30-year old individual to purchase a cover of Rs.1 crore for a time period of 30 years by paying annual premium of Rs.8500 which is very feasible.
Term insurance plans are very flexible in nature. Usually, you have to undergo several check-ups when purchasing a life insurance plan, however, most of the online term insurance policies do not require you to undergo one in cases where cover amount is 50 lakhs or less.
In comparison to other life insurance policies, the claim rejection in term insurance plans is much lower. However, it is important that the insurer discloses honest details with the insurance provider including his health habits and financials to ensure a hassle-free claim process.
There are a large number of riders that come with term plans such as critical illness, partial disability, accidental death, income benefit, or waiver of premium. The riders can be purchased easily depending upon the requirements of the insurer.