Life is uncertain, and you never know when an unfortunate event may leave your family alone. In your absence, you do not want your loved ones to face a financial crisis. It is important that you ensure their monetarywell-being, especially if you have any debts.
As your responsibilities grow, you may have increasing liabilities, such as a home loan, education loan for your children, and other financial obligations. In your sudden absence, your family will have to face the burden of repaying these debts, which may wreak havoc on their financial stability.
Term insurance plan
An affordable option to safeguard your family is to opt for term insurance. It is a pure life plan that pays the insurance benefits to your nominees in case an unforeseen event occurs during the policy duration.
As term insurance is a pure life cover without any maturity benefits, the premium is lower as compared to conventional life insurance policies. Therefore, you can procure higher coverage at an economical premium.
Here is how a term insurance policy protects your family against liabilities:
- It pays the outstanding debts
You may acquire several high-value investments for your future during various life stages. Additionally, you make some purchases like a home or a car for your convenience and comfort. Moreover, if you have young children, you will need to plan for their education and wedding.
Often, to meet these various goals, you may avail of some form of credit. These include different kinds of loans, credit card liabilities, and line of credit. When you take these credit facilities, you plan for their repayment over the long-term.
However, in your sudden absence due to an unfortunate circumstance, all the outstanding debt liabilities will befall on your family. If you havenot planned for such uncertainties, your family may struggle in meeting these unpaid liabilities. A term plan will pay a lump sum in case of an untoward incident, which you can use to repay these debts.
- It reduces tax your liabilities
Apart from securing your family’s financial safety, a term plan is an excellent way to decrease your taxes. The following tax benefits are available on these types of insurance policies:
- Section 80C
Under this section, an amount of up to INR 1.5 lakh paid as term insurance premium is eligible for a deduction. The same is available for self, your spouse, and your dependent children.
- Section 80D
Insurance companies provide additional riders like critical illness cover along with your base plan for more coverage. The premium paid for availing of this rider coverage qualifies for an exemption under this section.
- Section 10(10D)
As per this section, the policy benefits that your nominees receive are tax-free. Therefore, they can use the entire amount to meet various financial obligations.
- It ensures monetary security from uncertainties
An online term plan offers financial protection to your family if something tragic happens with you. A financial crisis may arise due to other circumstances, such as a critical illness or an accidental disability.
Term insurance plans are beneficial in such situations too. You may enhance the coverage with additional riders, such as accidental permanent and total disability, critical illness, waiver of premium, and income-replacement. These riders provide extra protection to your family and avoid financial distress in an unfortunate circumstance. However, before you add one or more of these riders, determine the needs of your family, as every rider is available for an additional premium and increases the total cost of insurance.
You may choose from different online term plansoffered by various insurers. If you still havenot got a suitable policy, do not delay further.Secure your dear ones to ensure that they do not have to go through the difficulties of repaying your debts when you are not there with them.