Term Insurance: Can You Afford Not to Have It?
Aman receives a phone call while at the office. He picks it up in the buzzing environment of his office; with all the stress of working overtime to pay off debts, he loses his mind as soon as he listens that the caller at the other end is requesting him to get Term Insurance. Without giving it any thought, he cut the call. Exhausted with work and stress, he heads out for home hastily, and he was about to get into a near to death accident but luckily did not.
Life is unpredictable. Hence, getting Term Insurance is a requirement to ensure financial safety to your immediate dependent family members. Keep reading this blog to get an answer to the question- Term Insurance: Can you afford not to have it?
What is Term Insurance?
To explain it in the simplest form, Term Insurance is an agreement between the policyholder and the insurance company that if the policyholder passes away untimely, the company will give the insured money to the nominee/s. A nominee is usually a direct dependent of the policyholder. The insured cash is given out to the nominee in either lump sum or instalments for a specific period.
For example: for a sum insured amount of Rs. Fifty lakhs, the beneficiary can either opt for a lump sum payout or in monthly instalments for 10 or 15 years.
Benefits of getting a Term Insurance Policy
Term Insurance is very beneficial for providing financial security to your family and loved ones. Let’s see why you should get Term Insurance.
- Takes care of financial liabilities
The sudden demise of the family’s primary provider can give a substantial financial shock with the loss of income. But with Term Insurance, they can live relievedly without having to worry about any debts or loans. Other financial liabilities like a child’s education, marriage, elderly parents, etc., can be easily coped up with.
- Helps in meeting daily expenses
Without the family’s breadwinner, it becomes difficult for them to even cope with minor and regular expenses. But with the insured money, your family will be able to pay off routine expenses like food, medicine, bills, etc.
- The tax-free payout for the dependents
Your family will be paid the entire sum promised without any sort of deductions or tax cut-outs. You don’t have control over every situation of your life; save your family from suffering from a financial crisis by getting Term Insurance.
- Tax saving benefits
Under Section 80C of the Income Tax Act, 1961, you are entitled to tax benefits up to a maximum of Rs 1.5 lakhs. Therefore, not only does it give your family financial security in the case of your untimely death, but you can also avail benefits of it on your present income.
Can you afford to skip Term Insurance?
Before you decide whether to get or not get Term Insurance, ask yourself these questions to find out if you can go without it.
Question: Are my current savings and investments enough to meet my family’s expenses fundamental for life?
Answer: You may have made investments or acquired emergency funds so that your family can use them in times of financial crunch. But it is essential to keep in mind the rising inflation. Ask yourself, are your investments or emergency funds enough to give your family a comfortable lifestyle in your absence?
Question: Is my child’s future secure after my demise?
Answer: Everyone wants to give their child the life they dream and desire. They want to see their child grow into a successful human. We are sure you have made savings for your child’s education and bright future. But what if, due to your sudden demise, all these plans don’t fall in place. Will your funds be enough?
Question: Can my family pay off my home loan debt (if any)?
Answer: You finally got your dream house or dream car, and you are already paying the loan. But in case of your unexpected demise, the load of the loan will be on your family’s shoulder. And if all your investments are utilised to pay off the loan, how would they pay for their daily needs?
You need to have an answer to all these questions to ensure a hardship-free life for your family and loved ones in case of your unforeseen death. This is where Term Insurance comes into play. It offers a standard solution to all the questions mentioned above.
A lot of people across the world have benefitted from getting timely Term Insurance. Your unexpected death will already be brutal on your family’s heart; why make it hard on their pockets too. If you have a family dependent on you, investing in Term Insurance is sensible and practical. If you are still in dilemma, rethink all the questions given above and make a rational decision.
When is the right time to buy a Term Insurance Plan?
The best time to get a Term Insurance plan is as early as possible. Simply because people who buy it at an early age are charged a lesser premium compared to those who cross a certain age. The earlier you start, the affordable it is.
How Much Term Insurance To Buy?
Well, a simple thumb rule says that you need to have a life cover of at least ten times your annual income. However, the fact is that your cover needs to be large enough to account for your current and future liabilities and your financial goals.