Why Is Term Insurance an Ultimate Choice?
Even a decrease of 10% in the salary of the breadwinner feels like a significant pinch in the overall household expenses of a normal earning man in India. Now, can you imagine what does happen when his/her income drops by 100%? Well, this is what is felt to the family when its breadwinner dies.
However, the loss of life can never be recovered, but the finances can be. The financial loss can be recovered if the breadwinner has taken a suitable term insurance plan.
A term plan or term insurance plan is also termed as pure risk coverage policy and is considered as the best insurance covers as it provides various benefits at an affordable budget. The reason for calling it a risk cover is the nature of this plan by which it single-handedly handles any type of life threats that may arise to its policyholder. In this way, a term plan helps the family to overcome financial damages that can emerge after the demise of the policyholder.
The reason for calling it a term plan is very simple. This insurance policy provides coverage only for a certain period of time which is called as a term. If the policyholder dies during this term, then only the death benefits are provided to his/her family. So, the policyholder has to select the term of his/her insurance policy. Generally, the terms are long enough that they cover the entire life of the policyholder.
Overall, we can say that a term insurance plan comes with a lot of benefits which can be availed very easily by its policyholder. Today, here we are discussing some of the points that make a term plan the ultimate choice for those who want financial stability of their loved ones at an affordable price.
- The Simplicity of Term Plans: One of the best things about a term insurance policy is its simplicity. Understanding the terms and conditions of an insurance policy is not an easy task, but with term insurance plan it comes very easily. The main reason for the same is its simple nature of providing life cover, unlike any endowment plan. An endowment plan comprises both a savings plan and risk cover. So, a policyholder has to divide the premium amount that he/she pays for savings and risk cover. This is the reason an endowment plan is difficult to understand while comparing it with a term policy.
- Get High Coverage at Low Cost: The good part about purchasing a term plan is its low cost and this cost decreases when you purchase it online. Most of the people in India do not purchase an insurance policy because of its high cost. However, this is not true with the term insurance plan because you get it at a really affordable price. Moreover, the coverage provided in a term insurance policy is also high. For a term plan of Rs.1Crore, one has to pay approximately Rs.563 every month, which is quite reasonable.
- Tax Benefits: People generally think that endowment plans are the best for saving taxes because with more premium it provides tax benefits under section 80C of the Income Tax Act. However, one should be well aware of the fact that despite the low premiums, the term insurance plan also offers tax benefits under section 80C.
- A Flexible Choice: With various other advantages of a term insurance plan, picking it is very easy. If a policyholder stops paying the premium for his/her term insurance plans, then the risk cover ceases and one is not liable to pay anything as it does not have any savings element in it. While in the situation of cash value policy, one gets the complete survival benefit only when he/she fulfils the complete tenure of the policy. The moment one stops paying the premium, then he/she has to suffer a great financial loss as he/she will not be able to get back the portions of saving without some specific deductions.
The Bottom Line:
A term insurance plan is a perfect choice for the people who want to opt for an insurance plan that provides high coverage at lower rates of premium. As well as, it is very easy to understand term insurance plan and very flexible as well. Even though your investment portfolio should have a mix of different investment instruments, but in case of low budget, a term plan is the most preferred choice.
In this way, instead of getting stuck into some costly and complicated insurance plan, it is best to purchase a term insurance policy. The above mentioned are some points that make it the ultimate choice, however, there are many other reasons to make it the best, which one can get to know when exploring.
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Founder Dinis Guarda
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