Term Insurance For A Stress Free Future

2024-08-02

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A term plan is basically a contingency plan that goes into action and takes care of your family’s finances if something happens to you when they are most vulnerable. India Spend has reported that 988 million Indians do not have life insurance - and the ones that do, are not adequately prepared. The insurance policyholders are under-estimating the impact of a financial emergency - India Spend has reported that insurance policyholders won’t be able to cover more than 90% of the unexpected costs of an emergency.

Such alarming facts amplify the need for term insurance now more than ever. Term insurance comes with a unique set of benefits that can help policyholders financially secure their future:

Affordability: Term plans come with affordable premiums and are built on the insight that your loved ones are more vulnerable at particular periods in their life. Term plans, therefore, let you buy protection for your family for a limited - and relevant - period of time. Unlike Whole Life Insurance, they do not stretch to the end of your life. They only provide cover for the term specified in the contract.

High Sum Assured: A term insurance plan, while providing you with utmost affordability, also gives you the benefit of a high sum-assured. Some term plans even offer policyholders a sum assured as high as Rs. 1 crore and above.

Tax Benefits: By opting for a term plan, one can help reduce their tax burden considerably. If you opt for the old taxation regime of 2019, which still offers deductions and exemptions, your term insurance premiums and payouts can be eligible for tax benefits.

Under Section 80C of the Income Tax Act, you can avail of deductions of up to Rs. 1.5 lakhs on the premiums you pay towards your term insurance policy.
Under Section 10(10D) of the Income Tax Act, the payout received from a term insurance policy is exempted from taxation. In order to be eligible for this benefit, the premiums paid should not exceed 10% of the sum assured.
If you opt for a medical rider (Critical Illness, Surgical Care etc), you can avail further tax deductions under Section 80D.

Flexible Coverage: Term insurance plans can be tailored to one’s financial requirements. One can even tailor the coverage offered under such plans. The three broad types of coverage on offer are:

Increasing Coverage - Under such plans, the life insured can increase the coverage annually. This kind of plan is suitable for those in the early stages of their life, who might face an increasing amount of liabilities as they age.
Decreasing Coverage - Under such plans, the life insured can decrease the coverage annually. Such plans are suitable for those with liabilities that will decrease over a period of time.
Level Coverage - Under such plans, the amount of coverage stays the same, throughout the policy tenure.

Flexible Payout Options

Term plans offer flexible payout options like the following:

Lumpsum: You can obtain the full sum assured at once if some heavy expenses are looming large.
Lump Sum + Monthly payouts: You can choose to obtain 50% of the sum assured as an upfront lump sum, and the remaining 50% as a monthly payout. The monthly payouts act as a salary replacement and help you budget better.
Only monthly payouts: You can forgo the lump sum and choose to receive only monthly payouts - this is suitable for families that are not particularly financially-savvy.

Riders

Beyond the baseline plan, you can also opt for additional protection by way of built-in riders. In addition to your pre-determined sum assured, you get a sum of money on diagnosis/declaration of a specific situation. Some of the riders available are:

Accidental Death Benefit Rider
Accidental Total Permanent Disability Benefit Rider
Child Support Rider
Surgical Care Rider
Critical Illness Rider
Hospital Care Rider

Conclusion

A term plan is a vital addition to any working person’s financial plans. They are flexible, come with affordable premiums, and provide long-lasting protection for the ones you love. A term plan protects your families from unpredictable financial emergencies. One such term plan that is tailor-made for you and your loved ones is the iSelect Smart360 Term Plan from Canara HSBC. The iSelect Smart360 Term Plan offers extensive protection at premiums that fit everyone’s budgets. You also benefit from flexible premium payment options, joint spousal cover, 4 different riders available and return of premiums benefit!