Investing for your family is a major responsibility that every individual needs to fulfill. There are several investment plans out there to suit the risk taking appetite of every individual. Amongst the many plans is term insurance. This plan is meant to offer your family the much required financial security in your absence. This is a robust plan that ensures all your financial responsibilities are fulfilled when you are not around.
The functioning of a term plan is very simple. Being flexible, this plan allows you to choose the tenure you want, the sum assured and the payment mode for the premium. You are required to pay a fixed premium amount towards the plan, that can be paid annually or semi annually. The policy holder assigns a nominee of the policy. This nominee becomes the beneficiary of the policy in case of the unfortunate demise of the policy holder. The nominee receives the entire sum assured of the policy.
Term insurance offers you the following benefits –
Comprehensive cover –
The best part of a term insurance is that it offers you cover in case of every kind of natural causes of death, depending on the specific policy. So, you can avail the policy benefits due to death in case of ill health, accident, terrorist attack etc. You also have the facility to add in a few riders to make the policy all the more comprehensive and cover aspects the policy does not cover originally.
Complete financial protection to your family –
In case of the sudden demise of the policy holder, the entire sum assured is handed to the nominee of the policy. This amount proves absolutely beneficial to meet the different requirements of life in the absence of the bread winner. The emotional vacuum is impossible to fill up. But the financial aspect of life can be taken care of.
Secluded plan for the financial safety of your family –
Unlike ULIP plans and endowment plans, a term insurance does not offer any maturity benefit or survival benefit. The plan is purely designed to support your family in your absence. So there is no fear of the sum assured getting spent in case of any crisis. The amount is only handed to the nominee in case of an eventuality.
Cover for home loan –
Most of us opt for a home loan to build a haven of our own. The repayments of this loan last for a considerable time of your working years. In case of sudden demise of the borrower, the dependents may lose possession of the house if they are not able to repay the loan. The amount got from the term insurance can be used to make the payment of the loan amount. Hence, be sure to insure your family adequately if you have a home loan to support.
Tax Benefits –
A term plan may be intended to benefit your family after you, but in your lifetime it does afford you great tax benefits. The policy offers you tax savings on the premium paid and the benefits received, subject to the prevailing provisions under Income Tax Act, 1961.
Why a term plan is the best to invest in