Top 5 Importance Of Term Insurance

Top 5 Importance of Term Insurance

Top 5 Importance of Term Insurance:

 

Before I jump on to the concept of Term Insurance first of all let us understand that there are two types of Insurance:

• Life Insurance

• Non-life insurance (vehicle insurance, fire insurance, etc.)
Here, we are going to talk about LIFE INSURANCE only.

Term Insurance is a kind of Life Insurance in which the insured character covers himself for a particular period.

If something happens with that insured person within that specific time and if the policy is active, then the death benefit will be passed onto the nominee.

We can say that our family members require our love and care, but unfortunate events can’t replace that person but surely can replace his income and that is the sole need I feel that Term Insurance is necessary for every earner in the family.

 

Importance of Term Insurance:

 

1. Term Insurance is very cheap and affordable Insurance:

 

Let’s take the example of 22 years Ram who has a sum insured of 25 lacs and a policy term of 35 years.

If Ram takes an Endowment Policy, he needs to pay per monthly premium of Rs.5483 for LIC plan no. 914.
But now if he takes a Term Insurance Policy, he needs to pay a premium of only Rs. 1162 for LIC term plan no. 859.
Thus, we can observe that the Term Insurance plan is 5 TIMES CHEAPER when compared to the Endowment Plan.

 

2. Term Insurance plans offer much higher coverage:

 

when compared to traditional Endowment plans or Ulip plans at much lower premiums. In traditional or Ulip plans, the coverage offered (sum insured) is only 7 to 10 times the premium while on the other hand if we take Term plans then we’ll get a sum insured of around 1 Crore which is almost 50 to 60 times of the premium.

 

3. Term Insurance is very easy to understand:

 

The simplicity of Term Insurance is one of the major reasons for its growing popularity. Term Insurance plans are pure life covers that focus on offering your dependents the contracted sum insured in case of your demise.

For the above to happen you don’t have to do much, just pay your premiums on time without any break.

 

4. Income Tax benefits available for the premiums paid and compensation received:

 

-Section 80(c) for the premium paid
-Section 80(d) for critical illness premium
-Section 10 (d) for the claim amount paid
(No deduction towards taxes from the claim amount.)

 

5. Fixed premium installment for life:

The premiums will be locked for the duration of the plan. Start early to lock your premiums at lower levels.

For example, if Ram takes a Term policy when he is 3o years old, the term plan insured is 1 crore, coverage-45 years( till he reaches 75 years), and the premium per year is Rs 10000. The total premium he is likely to pay if he survives till 75 years is 4.5 lacs.

Now if he takes the same policy when he is 45 years old then if he survives for 75 years, the total premium he is likely to pay is 9 lacs which is double the above situation.
Thus, the same premium is payable for the entire duration of the policy.

 

Reasons why You should buy Term Insurance:

• Safeguard loved ones financially in the event of a sudden passing. This is the main reason for term insurance premiums. Your term insurance death benefit will help your family in paying unpaid debts and living expenditures in the event of your untimely death.

• Gives you comfort to know that your family is well-off. You might feel more at ease knowing that your family is financially secure. Without having to worry about what would happen to your loved ones in the event of death, you can focus on living your life.

 

Conclusion:

Hence, it’s The Safety Shield of Your Family. Term insurance may seem like just another expenditure during the chaos of financial decisions. But it’s more than that; it’s an essential layer of protection woven with financial security and comfort for your family member.