Most people, especially young adults, overestimate the price of term insurance. Though this insurance sounds like something that we should have but is often perceived as the expense which we can’t afford. However, you might be surprised to know how affordable term insurance really is. Term insurance premium for a substantial amount of coverage for young, healthy buyers is as low as Rs. 25 a day — much less than the cost of a cappuccino.
If you are looking to offer financial support to your loved ones, you can obtain quality coverage within your budget, giving you the peace of mind on your family's future.
- So, here are some reasons explaining why term insurance is the most affordable form of life insurance:
- 1. Can Be Customised To Fit Your Lifestyle
Term insurance gives you the power of choice. The benefits and the features of the plan can be modified or changed in the future according to your needs. You can choose the term plan that is most suitable for you at the moment, and as your capacity to pay for premiums increases (with increasing income), you could increase the sum assured or add other options to your plan.
- 2. Protects Your Family from Financial Strain
Term insurance is an excellent choice to secure your loved ones against the financial strain in your absence. It can be used in cases like:
- Estate creation in the event of your premature death
- Providing for your children until they graduate from college and become financially independent
- Paying off outstanding debts or paying off mortgage loans of your home
- 3. Maximum Gain with Small Investment
Term life insurance is available at a very nominal amount. For instance, a term plan with a sum assured of Rs. 1 crore and 30-years policy period can be availed by paying a premium as low as Rs. 700-800 per month. Which means, you hardly need to invest 2 to-3 percent of your salary.
Most importantly, whatever little amount that you pay as a premium, it offers much more benefit than it's worth as the returns on your investments are way beyond what you pay for.
- 4. No Fund Management Charges
Term plans do not have funds that need to be invested in the market and monitored, unlike money-back plans. Therefore, there are no money management related expenses. This allows insurers to offer term insurance at highly competitive premiums.
- 5. Guarantees A Fixed Amount of Premium
Level term insurance plans ensure that you pay the same amount of premium throughout the policy term unless you increase the cover or add a feature.
- 6. Lower Distribution Expenses for Online Plans
Term plans available through online mode are cheaper as insurance companies save on paperwork, logistics and people cost, which in turn, is passed on to the customers, making it more affordable.
- 7. Offers Rider Benefits
Riders in term insurance are add-on benefits or put simply, the top-ups that provide you additional coverage. Life insurers like Future Generali offer riders such as Critical Illness, Accidental Benefit etc. which help at different stages of life, against many unwanted contingencies.
With an effective term plan that is clubbed with riders, you can cover almost all possible life risks and offer financial assistance to your family to live a stable life after you.
- 8. Flexibility to Choose Premium Payment Mode
When it comes to payment of premium, you can always choose the premium payment mode based on your convenience. One can pay the premiums on a monthly, quarterly, semi-annually or annual basis. Payments made on an annual basis offer policy seekers huge discount; as much as 10 percent less on premiums.
- 9. Flexibility to Choose the Length of Your Policy
Whether you are thinking of long-term or short-term coverage, term insurance gives you a lot of options for it. You can choose your policy term for as short as 5 years to as long as 40 years depending on your needs.
- 10. Tax Savings as Per Income Tax Act
Buying term insurance not only offers wider coverage but also tax benefits under Section 80C. You get tax exemption on the premium paid up to Rs 1.5 lakhs per annum.
Considering the many benefits of term insurance made available to you, investing your hard-earned money in buying one is definitely a win-win situation.