Term insurance is the most basic form of life insurance, and it is popularly referred to as pure protection policy. As the name suggests, it provides coverage for a specific ‘term’ or duration.
In the event of your unfortunate demise during the policy period, the insurer will pay the sum assured to the nominee. Your family can use the money to carry out their regular life, pay off the debts (if any), and be financially independent after you are gone.
Although the standard term insurance plan does not offer any maturity pay out or survival benefit, nowadays, insurance companies offer other benefits. You can customise the term insurance policy, choose the riders you want, etc. Despite its importance, many people, especially youngsters, tend to put off buying term insurance as they believe it is an unnecessary investment.
Such thinking can be counterintuitive. Here are a few reasons why buying a term insurance plan must be your top priority.
Securing your loved ones’ financial future
Term insurance secures your family’s financial future so that they can maintain their usual lifestyle without compromising on their goals, even when you are not around. They can use the amount they receive from the insurer to pay for your child’s education, pay off loans, etc.
You can customise your term plan by choosing the right sum assured based on your income and future expenses. You can choose the highest amount that you are eligible for and ensure that your family receives a significant sum, which would otherwise take many years to save.
One of the most important reasons why many insurance experts recommend buying term insurance at an early age is that you can get coverage at an affordable premium. As you grow older, you may have to pay a higher premium for the same policy. Hence, buying term insurance must be your top priority as soon as you start your professional career.
Plenty of riders to choose from
The riders are additional coverage options that can be purchased by paying an additional premium. These riders are specifically designed to provide you with additional protection against risks that are not covered under the regular policy. For example, you can purchase a critical illness rider, which will help you get coverage against life-threatening ailments like cancer.
If you are diagnosed with any critical illness covered under the rider, then the insurer will immediately pay the sum assured. You can use this amount to pay for the treatment expenses or any other purpose as you deem fit. Thus, by purchasing term insurance at an early age, you can be prepared for future uncertainties.
Enjoy tax benefits
One of the critical aspects of financial planning is saving taxes. You can enjoy tax benefits on the premium paid up to Rs. 1.5 Lakh in a financial year under Section 80C. Thus, by purchasing term insurance at an early age, you can reduce your annual tax liability every year and save a significant amount in the long run. Also, the sum assured your family members receive in the event of your demise is fully tax-free.
Peace of mind
By purchasing a term insurance policy at an early age, you can have peace of mind knowing that your family members need not depend on anyone in your absence.
If you are a first-time insurance buyer, then buying a term plan could seem overwhelming at first. However, by knowing the right steps to purchase the policy, you can easily get the coverage you need. Also, by buying the policy at an early age, you can get insurance protection at a lower premium and be assured that your family has the necessary financial protection.