5 Things to Know Before Buying Term Insurance

Insurance has garnered a significant amount of attention in recent times. Especially among the younger generation, who has understood its importance and are looking forward to purchasing. 


As a financial instrument, insurance can play a vital role in the life of a person and his family. However, you must choose the right one.


There are many insurance products in the market, life insurance, and medical insurance being among the most preferred options. 


If you are the only earning person in the family, you need a product that offers better protection and cover in comparison to other insurance policies. Perhaps, you can consider a term plan.


1. Low premiums: When people hear about an insurance policy that offers a wide spectrum of coverage to the policyholder, they picture a high amount in their minds.


Term insurance, on the quite contrary, is believed to have the lowest premium among all other policies in the market. 


Since the premium for term insurance policies is determined by factors like policyholder’s age, habits, and medical history, for some applicants the premium can be as low as INR 500 per month. 


For people who look forward to investing a very small amount of their monthly income for insurance, term insurance can be an ideal option.


2. Plan Choice: Term insurance policies come with a lot of options. From picking a term insurance policy with single life cover for a sole earner to covering your spouse in a joint life policy, the options are endless. 


Based on your needs and plans, you can choose the ideal product for yourself and your loved ones. Consider all the factors before buying a term insurance policy.


3. Tax Benefit: Tax savings entice consumers towards term insurance. Tax savings featured under section 80C of the Income Tax Act, 1961, allow the policyholder to exempt from tax on premiums paid and the sum assured.


4. Flexibility in Paying Premiums: There’s a myth wherein people believe that term insurances are only available for a maximum of 25 years.


However, it isn’t true, as term insurance plans with extended duration, are available as well. Experts suggest such plans, as they cover for a long term, and the premium is locked, thereby preventing it from getting affected by the market conditions.


5. Premium Flexibility: There are many factors involved when it comes to premium options. Earning, tenancy, disbursals, and mortality are a few of the many factors which must be considered when deciding to increase or decrease the premium amount. 


However, the premium amount level is pre-specified and thus a policyholder cannot exceed the amount.


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Garvit Chaharia is the Founder of Deeva Ventures & has helped more than 10,000 investors manage their Wealth, by providing disciplined advisory on Portfolio Management, Risk Management & Debt Management.