Do you worry about your dependents' financial security after your demise? You’re not alone, and there is a possible solution to your concern. All you have to do is purchase a term insurance policy and provide robust financial protection for your dependents. But what is term insurance? This article will explore term insurance and the steps to buying the right plan that suits your requirements.
What is Term Insurance?
Term insurance is a type of life insurance that offers pure protection to your family. It provides coverage for a specific term: 10 years, 20 years, 30 years, and so on. For a policy to stay active and continue providing coverage, timely premium payments must be made. The nominees will receive the death benefit, which can be used to pay off loans and other expenses. This way, your family will not be financially burdened in case of your demise.
Why Prefer a 1 Cr Term Insurance Plan?
A 1 crore term insurance plan benefits individuals across various income levels, particularly those with dependents.
Extensive Financial Security for Your Family: A 1 crore term insurance plan ensures your family is financially secure in the event of your untimely death. It offers them a significant amount that can be used to support daily living expenses, your children's education, and other financial obligations.
Affordable premiums: Term insurance plans have lower premium costs than other life insurance policies. Even for a 1 crore sum assured, the premiums are highly affordable, especially when opting for a younger age.
Covers Large Financial Liabilities: If you have big financial liabilities, such as a home loan, business loan, or education loan, this 1 crore policy would ensure that those debts are cleared without burdening your family in your absence.
Tax Benefits: Premiums paid are eligible for tax deductions under Section 80C of the Income Tax Act. This means you can save a large amount from your taxable income. The death benefits your nominees receive are also tax-free under Section 10(10D).
How to Purchase 1 Cr Term Insurance
Buying a term insurance plan is simple. Let’s examine the steps to purchasing a 1 Cr term insurance policy in India.
Step 1: Detailed Understanding of Your Requirements
A good starting point is to understand in detail how much your dependents will need regarding finances. Then, go through all your financial liabilities to determine whether investing in a 1 cr term insurance policy is logical. Remember that the coverage amount should be sufficient for the future financial needs of your dependents in case you are no longer there to provide for them.
Step 2: Estimation and Comparison of Premium
Before purchasing a 1 crore term plan, it's essential to understand the premium you’ll need to pay. To avoid being overburdened, keeping this premium within your budget is wise. You can easily use the term insurance premium calculator to estimate the premium upfront and make well-informed decisions.
Step 3: Exploring Financial Reputation
You should ascertain the financial reputation of the top term insurance providers before finalizing one. Choose an insurer with a high claims settlement ratio. This step ensures peace of mind, knowing your dependents' financial well-being is secured.
Conclusion
Term insurance is a financial security shield for your dependents. While there are many insurers in India, finding the correct term insurance policy that meets your requirements can take time and effort. Estimate your desired coverage amount and policy tenure thoroughly. Also, valuable riders, such as critical illness, accidental death benefits, disability income, etc., can be included to enhance the base coverage.
