Your income and most importantly your presence in your family’s life, both are two of the biggest assets your family and you possess. You need term insurance to continue financially supporting your family in case something happens to you. So what exactly is term insurance? Let’s understand.
What is term insurance?
Term insurance falls into the category of life insurance. It’s an insurance plan in which the insurer pays a fixed large amount to your family in case of your unfortunate death or disability. You have to continue paying a premium for a pre-decided fixed amount of years. Please note, this plan only works in case your unfortunate demise happens during the active policy term or years.
What are the benefits of term insurance?
Tax benefits – You can save up to 46,000 in taxes under section 80C of IT act in term insurance.
Affordable premiums – Term insurance products usually have a reasonable premium amount.
Comparatively higher coverage – Term insurance products offer quite a large coverage that may even range from Rupees 50 lakhs to Rupees 1 Crore.
Critical & Terminal Illness – Some term insurance plans even offer coverage in case of terminal or critical illness.
Now that we understand what term insurance is and what its benefits are, it’s important to learn about the dos and don’ts of term insurance.
What are the dos and don’ts of term insurance?
Ensure that you purchase your term insurance policy at the earliest. When you buy term insurance at the earliest, you end up paying a lower premium because you are healthy.
Don’t end up purchasing a plan with a single option of premium payment. Purchase a plan which has a yearly payment option when it comes to premiums.
Don’t get influenced by riders in term insurance riders. Riders are Additional coverages that are provided on an individual basis. Don’t go for a very expensive term insurance plan with unnecessary riders. Rather, you can purchase a simple one with basic and important riders.
Ensure that you go through all the policy papers. It is important to do this thoroughly because once the policy is issued, it’s difficult to change the terms and details later.
Don’t purchase more than a single policy or only purchase a maximum of two policies. Purchasing more than two policies will not serve any purpose and will unnecessarily run you into financial trouble.
Do select a more popular and credible insurance company. Selecting the accurate term insurance company helps you acquire maximum benefits from your policy. A well-known, popular and credible insurance brand is what you can trust.
Don’t purchase a small insurance coverage. Buying a small insurance coverage will not help your family in the long run. You have to understand the rate of inflation and think of future conditions while purchasing a cover.
Do inform your family members about your purchase of the term insurance policy. It’s imperative that your family members know about the overall policy and how to proceed with the claims process in case of your unfortunate demise.
Don’t keep any medical or health information hidden from the insurer. Transparency with the insurer is a must or else it will create claim issues in future.