Are you looking for investment instruments to safeguard your family’s financial future? Are you confused between traditional life insurance and term insurance? Well, term insurance in India is a better alternative if you aresearching for an affordable and reliable investment option. This is because it provides a substantial cover at an economical premium as compared to other life insurance plans. If you are wondering what is term plan, then read on.
What is term insurance?
Term insurance is a type of life insurance policy, which is active for a particular period, as selected by the policyholder. With this plan, the policyholder’s family members can meet their financial goals and requirements, as it provides them with monetary stability in case of the policyholder’s untimely demise.
Is there any age limit to buy a term plan?
The term insurance age limit in India is from 18 to 65 years. So, you can buy this plan until you turn 65. However,investing at an early age is advisable as the premiums are low. The premium becomes higher for a person nearing the 40s, which is when most people think of buying term insurance. So, to avail of a higher coverage at a nominal premium, you must purchase a term plan when you are younger. For instance, buying such a policy when you have just started earning will prove to be a wise decision in the long run.
Why invest in a term plan at an early age
There are various advantages of buying term insurance in Indiaduring an early phase of life. These include:
- Helps to organize your finance
It is essential to plan your finances right from the day you receive your first salary. Investing in term insurance is one of the ideal ways to start your financial planning. Apart from acting as a medium for systematic financial planning, a term plan gives you peace of mind, as you have secured the financial future of your dependents during your absence.
- Comes at a budget-friendly premium
One of the most significant benefits of buying term insurance plans in India at an early age is that you can get it at a reasonable premium. At a younger age, there are lesser chances of getting susceptible to chronic diseases. The premium of your term plan rises with age.So, it is recommended to invest in the plan when you have just started your career.
- Provides a high coverage
Another plus point of buying a term plan early is that you can avail of a sizable coverage at a pocket-friendly premium. Therefore, you can secure your family’s financial future at a low cost and provide them with the stability that they deserve in case of any unfortunate incident.
- Offerstax deductions
As per Section 80C of the Income Tax Act, 1961, the premium that you pay towards the term plan is tax-deductible. In this case, the permissible limit is INR 1.5 lakh per year. Besides this, the sum assured that your policy’s nominee would receivein your absence is tax-free under section 10(10D) of the Act.
- Allows you to build credibility
You can pledge your term insurance policy if you are looking for a home loan or car loan. With the term plan as collateral, the creditor can grant you a higher amount. This is because the risk of non-payment of the loan is reduced to a great extent. In the case of the policyholder’s death, the creditor can use the sum assured to clear their outstanding dues.
- Reduces the probability of application of rejection
Before issuing a policy, the insurer pays special attention to your medical history. At a younger age, your health is usually good, and the chances of being prone to critical ailment are less. Therefore, it is quite unlikely that the insurer will reject your term insurance application.
The life of your loved ones can turn haywire, especially if you are the sole-breadwinner and are no longer around due to any unfortunate incident. You work hard all your life to provide a better life to your family members, but what is the use if you donot plan for their financial future. The best way to provide financial protection to your family during your absence is bybuying a term plan.