Also regarded as protection plans, Term Plans are slowly but surely gaining popularity. Term plans are specially crafted to protect you and your family against any unforeseen circumstances. Our future is always changing based on the actions taken in the present. So naturally, there are risks involved. To protect ourselves and our families, Term Plans are the best available option. It is the cheapest form of life insurance and the chosen nominee gets the sum assured after the death of the policyholder if it happens during the valid policy term. In other words, it gives us the returns exactly when we need it the most.
Term Plans In Creating Wealth
It is normally considered that term insurance is meant for protection and not for wealth creation. When it comes to a term insurance, most people outlive the term of the insurance policy and avail no benefit after completion of the term. This contributes to the profitability of term plans to insurance companies. Hence insurance companies can afford term plans at low premiums to their clients.
These plans are no doubt beneficial to the family / beneficiaries in case of death of the policy holder and can provide sufficient funds to meet their requirements and needs. Hence in such cases, though not a source of wealth for the policyholder, term plans are a source of wealth to the beneficiaries. The following points provide use ways in which can maximize the benefits of term plans.
- Inflations hamper our financial stability. As a result, a rise in the premium amount prevents us from securing our lives in the best possible way. Term Plans are beneficial in such cases as, not only are they inexpensive, but the premium amount is affordable. Term plans are available which give you the option of choosing the desired sum assured based on the amount of premium one you are able to afford. Benefits are then calculated by the company, based on the premium amount.
- We spend our lives paying taxes. With term plans, under section 80C and 10(10D) of the Indian Income Tax Act, 1961; the policyholder can enjoy the benefits over the premium amount paid on plans with maturity benefits.
- Term plans are considered as a purchase of money. This implies that you are purchasing a sum assured beforehand to safeguard the future of your family as well as yours.
- Generally opted for a long-term, such policies offer the privilege of converting your chosen policy, within a specific period of time, to any other permanent life insurance policy with added benefits.
- Term plans can be purchased from any age starting from 18. The sooner you buy it, the better, as young policyholders acquire a substantial amount of coverage at a relatively low immediate cost. This guarantees the required level of coverage when needs and family obligations increase.
- Various types of term plans can be combined along with riders and other types of insurance to create a special package that covers death protection, savings and affordability.
- Claim settlement periods are the shortest for term plans.
- Term plans with riders are available that return the premium amount in case the policyholder has survived the tenure.
Term Plans In Aiding You Financially
The sole bread earner of the family often faces the thought of who will take care of the family after his/her demise? Or how will the needs of the family are met if something happens to him/her? The answer to such questions lies with Term Plans.
- It secures your family’s future and dreams such as education of your children and spouses’ retirement which needs substantial savings in absence of the policyholder.
- If the policyholder owns a large estate, such plans guarantee that the estate is not depleted by taxes and also takes care of any pending loan amount by covering the sum assured.
- Plans with a decreasing term policy ensure that mortgages are taken care of upon the owner’s death. Such policies usually work by decreasing the covered amount as the mortgage balance decreases.
- With customised term plans, the financial blow is softened in cases where the policyholder meets with an accidental death or critical illness or disability.
- With added maturity benefits such as Term Return of Premium Plan (TROP), the policyholder can opt for a plan wherein the premium plan acts as a secondary income or income replacement (in case of loss of job). Such plans not only offer all the benefits of a standard term plan but also ensure the policyholder can recover the cover amount in case he/she survives the tenure.
To meet regular expenses, getting insured is the best way to go about it and to get a life insurance from a term plan ensures that the dreams of the family are not compromised even after the demise of the policyholder.