Looking for New Term Plan, Here Are the Top 6 Things You Should Expect from It (Photo Credit: File Photo)
New Delhi:
There is no satisfaction in life greater than the one you get when you take care of your loved ones. From that first paycheck that you exhaust on gifts for your family, to the high and low points of life when you stand by them and contribute financially, your income plays a great role in shaping the life of others around you. Term Insurance can help sustain this dependance in case something untoward happens to you, and this alone makes it a vital addition to your financial portfolio.
But, as per a recent report, almost 87% of Indians do not have life cover. Additionally, only 43% of the policyholders purchase life cover for protecting their family, while others focus on aspects like returns, savings, and tax benefits. While these are important considerations, the primary function of a life insurance plan is the protection of your loved ones in your absence. So, keeping that in mind, in this article we will delve into what you should expect from a term insurance plan in 2024, so that you can get a plan that is comprehensive and beneficial on all fronts.
What is Term Insurance?
Term Insurance is a pure life insurance plan that covers your life for a certain period of time (hence the “term” in its name). During this period, if you meet an unexpected demise, your family receives a sum assured, called a death benefit. If you outlive the policy term, then the coverage lapses, and you do not get any returns.
This easy to grasp, straightforward life insurance plan is known for the amount of coverage it provides for a relatively lower cost. Still, the lack of awareness, and the disproportionate attribution of priorities and expectations from life insurance plans in India has held back this plan from truly reaching the masses. Let us try and address this.
6 Things to Expect from a Term Plan in 2024
The Indian market tends to lean towards traditional life insurance plans that aim to provide savings benefits to the policyholder. But their premium is not the lowest and thus they are not universally accessible. In case of low income, you might feel that life insurance is not within your reach, but that is not the case. Not only is it within reach, but you get a host of benefits that make it an undeniably good proposition. So, if you are looking for a term plan today, you should look for these 6 aspects to get the right coverage for you.
It Should Be Affordable
The biggest advantage of a term policy is that its premiums are low. In this aspect, term plans accord good coverage with a lower premium when compared to other products in the life insurance category. That in itself makes it a go-to option across income brackets. When you are looking to buy a term plan in 2024, be sure that the selected plan should never overburden your pocket.
The whole idea is to secure a safety net of protection for loved ones without any need for wobbling over the current financial stability. You should look for competitive pricing in the plans without compromises either on coverage or on the reliability of the carrier.
You can use a term insurance calculator to get an idea of the premiums that you’ll end up paying based on your desired coverage amount and policy tenure.
It Should Provide Sufficient Coverage
The basic underlying objective of any term insurance plan is that it provides financial protection to your family against your untimely demise. So, for that matter, it's very essential that the sum assured should be enough to easily cover their future financial requirements.
These will include their daily living expenses, any outstanding debts, education for the children, and other life goals. In general, financial advisories recommend an amount ten to fifteen times your annual income. However, it is necessary for you to come up with a more exact figure which reflects the impact of inflation on your family’s lifestyle as well.These will include their daily living expenses, any outstanding debts, education for the children, and other life goals. In general, financial advisories recommend an amount ten to fifteen times your annual income. However, it is necessary for you to come up with a more exact figure which reflects the impact of inflation on your family’s lifestyle as well.
It Should Be Flexible
The flexibility of a insurance term plan means that coverage, policy term, and premium payment options can increase or decrease as per your ever-growing and ever-changing financial situation and life stages. Look out for plans that offer single premium, limited premium, and regular premium payment options. One should also be able to choose policy terms according to their needs.
It Should Enhance Your Tax Savings
Besides the aspect of protection, a term plan also brings tax-saving benefits with it, that can further help enhance your tax savings. Premiums paid under a term insurance policy can be deducted from your taxable income (up to ₹1.5 lacs) under Section 80C of the Income Tax Act.
Furthermore, the death benefit that is paid to the nominee is tax-free under section 10(10D), subject to certain terms and conditions. These tax benefits make term insurance an efficient tool for saving on tax. Ensure that the plan you opt for in 2024 maximizes these benefits, adding to your overall financial planning strategy.
It Should Offer Riders
Riders are add-on benefits that can be attached to your basic term plan, offering increased protection under certain circumstances.
Some common riders include critical illness cover, accidental death benefit, and waiver of premium on disability, among others. Each rider adds to the scope of your coverage at a nominal extra cost. Evaluate all available term insurance riders and choose the best ones for you and your family. Such customization can make a world of a difference to the level of protection you procure for yourself—and more so, your dependents.
It Should Be from a Reputed Insurer
Lastly, it is also the reputation of the insurer that can help you make a decision regarding which term insurance plan should be bought. Look out for a company like Edelweiss Tokio Life Insurance, which has high claim settlement ratio and great customer service. Last but not the least the claim process of the insurer should be smooth and without any hassles. Reviews, ratings, and customer testimonials could be a good way to check an insurer on points of reliability and quality of services offered.
Conclusion
A term plan is a vital addition to your portfolio that doesn’t break the bank yet provides robust safety net for the ones who are dependent on your income. Whether you have just started working, or you are a seasoned professional with a family to protect and limited income to put in your portfolio, Term Plan is right for you. Just look for a comprehensive plan that can deliver on all fronts and attain the satisfaction of having secured your family. Afterall, there is nothing greater than that.
