Know These 4 Facts Before Buying Term Insurance Policy
Term insurance is perhaps the easiest and the most secure way to protect your loved ones and yourself against life’s uncertainties. Be it accidents, loss of income due to any life-threatening ailment, or even death – you can buy term insurance to make sure that none of the eventualities could jeopardise your family’s well-being.
Term insurance plans are designed to provide a list of benefits to help you and your family meet all short-term and long-term financial goals while overcoming any crisis. Despite this fact, however, term insurance plans are shrouded by a cloud of myths and misconceptions. These term plan myths not only put confusion in your mind against these financial instruments but also stop you from adequately preparing against life’s uncertainties. Here are a few facts about term insurance plans that you must know before you go out to buy the best term insurance in India for yourself and your loved ones.
1. Term Insurance Provides Benefits Beyond the Death of the Insured
The most common myth linked with term insurance is that it only offers insurance benefits after your demise (the insured) within the policy tenure. This is true for a pure term life insurance plan, which is designed to provide financial assistance in case of any eventuality.
However, there are different types of term life insurance policies available, offering a wide range of features and benefits to help meet your varied needs.
For instance, take term plans with return of premium benefit or TROP plans. A TROP plan provides both death and survival benefits. While the plan offers the agreed insurance coverage amount to your family upon your demise, you will receive back the total amount of annualised premiums paid towards the term plan in case you survive the policy tenure.
Moreover, the TROP and other term insurance plans provide rider add-ons and in-built features to help protect yourself against loss of income due to accidents, disabilities, and severe health ailments such as cancer.
2. Tax Savings are an Additional Benefit of Term Insurance, not its Only Benefit
There are instances wherein people buy term insurance in India, considering it as a tax saving option only. However, this approach is faulty, mainly because you are ignoring the larger picture. The primary purpose of buying term insurance is to provide a financial safety net for your family in your absence.
While term plans provide tax deductions as additional benefits up to Rs 1.5 lakh on the premium paid, you must select the best possible insurance coverage based on your financial needs and requirements instead of how much tax you need to save. Remember, choosing an inadequate term insurance coverage will prove to be costly for your loved ones. Also, when you opt for the highest possible coverage under a term plan, the premium payable automatically makes you eligible to avail of maximal tax savings under Section 80C of the Income Tax Act 1961.
3. Term Insurance Serves as a Platform to Support Other Investments
It would help if you did not compare buying term insurance with other investments based on their returns. Traditional investment instruments provide market-linked returns, unlike a term plan. When you buy term insurance, however, you receive much more than monetary returns on the investment – you receive a life’s worth of financial independence for yourself and your family.
The underlying functionality of term insurance and other traditional investment options defines their relevance. Thus, an ideal investment strategy would be to diversify your portfolio using several investment options to maximise your wealth creation potential and buy term insurance coverage to serve as a contingency cover for your investments. This way, while your other investments continue to grow over the years, the term insurance plan eliminates the risks involved.
4. People with Existing Health Ailments are Eligible to Buy Term Insurance
Reputable insurance companies offer term insurance cover to individuals who are suffering from any health ailment or condition. Considering their medical history or the period of coverage requested, however, the insurance companies may charge a higher premium compared to that offered for similar coverage to a healthy individual.
Also, the insurers expect the policy buyer to share correct and relevant health information while applying for the term insurance cover so that there are no unpleasant surprises for their family at the time of filing an insurance claim. If you are experiencing a severe health condition and choose to share false/incorrect information or provide incomplete medical history data, you may risk the rejection of your term insurance proposal or claim filed.
Buy Term Insurance for Long-Term Peace and Happiness
Buying term life insurance is one of the smartest and financially viable decisions that you can make to safeguard yourself against the uncertainties of life. With the number of online options available, you can easily buy term insurance in India by reviewing, comparing, and selecting the policies available based on your needs.
At the same time, avoid relying on any myths relating to term life insurance in India. Do the reality check on your own to make an informed decision and purchase the best term insurance policy in India for your loved ones.
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