Even before we start earning, we are instilled with the qualities of saving. That’s the reason we try to save money from what we earn. People get plenty of advice from their friends and colleagues regarding saving and how to go about financial planning. You can adopt many solutions to enhance your saving skills and safeguard your interests on a rainy day.
When it comes to saving, taking insurance plans is the best way to secure your life financially. Life insurance plans are the priority for those who are looking for an ideal means of saving through insurance plans. If you want to fulfill more specific financial needs, you can go for the term insurance plans. These plans are taken for a specific time period and fulfill a specific need.
It would help if you considered plenty of important aspects while taking up these insurance plans, choosing the right plan, for instance. This plan is also beneficial to avail tax benefits under section 80C of the Income Tax Act. In this article, we are going to discuss more choosing the right term insurance and make the most of it.
What is Term Insurance?
It is also a type of life insurance that people take for a particular time period and to fulfill a specific need. In case anything uncertain happens to your life, the sum assured will be given to the nominee of the policy. Yes, it is one of those insurance plans that have death benefits as well. The primary aim of term insurance is to fulfill your needs and provide financial security to your loved ones in your absence.
Who Needs A Term Insurance?
There are no hard and fast rules for someone to get term insurance. Anyone who has started earning and needs financial security for themselves and their families can take up this plan. There are plenty of goals in one’s life, like a kid’s education, higher studies, marriage, retirement, etc. All these phases have different financial requirements that can be met with term insurance. Your diverse financial requirements can be taken care of with the help of term insurance. In a nutshell, the need for term insurance directly depends on your and your family’s financial goals. If your life is filled with uncertainties or you are engaged in a job that needs protection, you must look out for a term insurance plan. It reduces your financial risks and increases your monetary benefits.
At What Age One Must Take Up A Term Insurance?
There is no particular age to take a term plan. Once you have dependant and formulated family goals, you can think about having a term insurance plan. If you are planning to start a family, you must not wait to take up term insurance. Let’s take an example of an insurance plan for a 30 years old non-smoker. The term insurance with a cover of ₹1 crore would be enough until the age of 60, with an annual premium of ₹7,400. The same plan for a 45 years old non-smoker will cost ₹14,700. However, the premium remains constant for the plan. This actually means that if you are a 30-year-old individual, you will pay the same premium for the next 30 years. The more you delay, the higher the premium will be. Hence, if you have decided to take up a term insurance plan, you must not delay it.
How To Choose The Best Term Plan?
There are different aspects of selecting a term plan that may or may not apply to your requirements. For instance, when it comes to coverage, life cover 20 times your annual income if you are 45 years old would be enough. In case you are older than 45 years old, the coverage might be around 15 times your annual income.
There are premiums you can pay monthly, quarterly, and yearly in terms of the premium payment. You can also connect with your bank and adjust periodic deductions from your premium. Also, there are plans that allow you to pay a one-time premium for the policy. It totally depends on your needs and premium payment requirements.
In the end, it is also essential to consider the insurance provider and their performance before selecting a plan. You must look into the claim settlement ratio that will determine the credibility of the company. Make sure to have a proper discussion with the insurance provider and out everything on the table before you take up their insurance services.
What Are Term Insurance Riders?
Now that you have come so far in understanding the worth of term insurance, it is important to understand the riders as well. Riders are basically add-ons that add value to your plans and provide you added benefits. The riders include a death benefit, critical illness benefit, premium waiver benefit. Let’s take an example; if you have taken critical illness as a rider, you will be eligible for the insurance pay-out from the insurer when you are diagnosed with any critical illnesses.
There are riders that can waive off your premiums; it will simply waive off. You can also think about accidental death benefits that will offer you added benefit on death by accident. It is important to understand the benefit of each rider and make optimal use of it during your application.