Sameer Arora is a newlywed marketing professional in his late 20’s earning a salary package upwards of Rs. 10 lakhs. With added responsibilities on him now, he has taken a wise decision of buying insurance to ensure his family can live a comfortable life in the event of his untimely death. Everyone around him suggested going for term plan, but no one could give him exact reasons why this insurance works out so well for almost everyone.
Here, we are trying to make things easier for him as well as for you.
Following are 10 reasons that explain why term insurance policies are the best bet:
1. Financial Security
A term insurance plan is ideally bought with the intention of meeting certain goals. For example, if a person dies unexpectedly, the money from insurance can be used to pay off debts or it can come handy for children’s education or marriage, etc. Therefore, it is advisable to buy a term policy early in your career so that it provides you financial security at least till you retire.
These are no-frill plans that make them really easy on your pocket. You can buy a simple plan for a fixed term at minimal premiums and if anything happens to you during the term of the plan, the nominee gets a lump sum amount. Due to heavy competition, premiums are low and if you buy an online term plan, you get further discounted products.
3. Easy To Find
Every insurance company is offering term plans, with or without riders and it is not a tedious task to look for one. You can simply log on to a website of an insurance web aggregator like comparepolicy.com approved by IRDAI that acts as a platform for providing information about various insurance products.You may compare among the term plans offered by various insurer’s and you’ll find the best policy of your choice listed there.
4. Tax Benefits
Premium paid towards the Term Insurance Policy avails tax benefits under section 80 C and the proceeds of the insurance policy is tax free as per section 10 (10) D of the Income Tax Act, 1961 as per the conditions laid in the Act.
5. Timely Payout
Most of the term insurance policies are pretty simple and therefore the insurance companies don’t have to debate a lot about paying up the claims. If there is death during the term of the policy and there are no suspicious circumstances surrounding the same, the nominee can get their claims easily without any hassles provided the nominee is done with the requisite claim formalities.
6. Low Claim Repudiation
On an average, if an insurance policy is active for over 10 years, chances of claims being rejected or repudiated are almost next to nil. Moreover, as per IRDAI guidelines, if the insured has made all disclosures, the company can’t reject the claims basis non-disclosure if the policy is in effect for two consecutive years.
You can buy these plans either offline or online. Term plans are easy to buy either way. You may also select how the policy proceeds can be disbursed in case of your death. Some term plans offer income benefit where a portion of the Sum Assured is given to the nominee immediately on the death of the insured and remaining amount can be given as a family income benefit to provide the regular cash flow to your dependents like in case of Sameer.
Even though choose the best term insurance policy are simple products, some also come with an option of getting add-ons. For example, Sameer can opt to add critical illness cover, accidental death benefit, permanent or partial disability cover etc. to his basic term policy to make the plan even more robust and risk-free. Of course, there is an extra cost for every rider, but it is worth it.
If you buy offline, agents’ commission on these plans is approximately 5-6%, which is one of the lowest across all insurance products. Even better is the decision to buy online term plan where you eliminate the commission part totally.
With changing needs and requirements as you grow old, you can decide to make changes in your plan by increasing the cover or tweaking other terms as per company’s guidelines. There would be a cost involved, but you can adjust the plan to suit your requirements.
These reasons are enough to make Sameer totally convinced about buying Term Plan. What are you waiting for?