Importance of Term Insurance at Different Stages of Life
Financial well-being is a basic life necessity. With life being uncertain, your sudden demise can bring your family’s financial well-being to a standstill. Term insurance plans will secure your family’s financial future despite your absence. Term insurance has become one of the basic necessities of life.
There are various companies that offer a wide array of term policies with many benefits. Let us check the benefits of a term insurance plan and its importance at various stages of life.
Benefits of a Term Insurance Plan
- Pay-Out Methods of Sum Assured: The nominee that you select will get the sum assured in case of your unfortunate demise. This pay-out can be received as a lump sum. Or you can choose to receive it monthly or annually in case your family cannot manage a big amount all at once.
- Add on Riders Benefits: Term insurance plans come with various rider benefits such as critical illness rider and accidental death benefit rider.
- Tax Benefits: The premium paid towards term insurance are deductible under Section 80C of the Indian Income Tax Act. The lump sum received by the nominee is also tax exempted under Section 10 (10D) of the Income Tax Act, 1961.
Term Insurance at Different Stages of Life
In life, there are different stages, each stage has its own goals, and they change with age. These goals can be getting a good education, buying a car, getting married, having a child, etc. It becomes important to plan these goals in advance in order to achieve them. Similarly, the liabilities of a person can also change with age. Therefore, term insurance is necessary at all stages of life.
Let us see the different stages of life and why term insurance is necessary at all stages.
- Young Stage: When you are young and start working, you do not have many responsibilities. This might make you think that buying term insurance at this stage of life is not essential. However, buying term insurance when you are young can be a smart choice as the premium amount to get a large cover will be very low. Since you are young, your chance of developing a critical illness is less likely, and that makes your premium amounts relatively low. Also, the premium amount is locked for the entire duration of your tenure, so the amount you will pay towards your premium will be very less compared to buying term insurance at a later stage of life.
- When You Get Married: When you get married, your responsibilities increase. Buying a term insurance plan at this stage is crucial as there is a need to protect your spouse and family against increasing liabilities. Your sudden demise can subject your spouse and family to financial hardships, so guarding them against these unforeseen circumstances becomes paramount. At this stage of life, you buy a house or a car, which increases liabilities. Therefore, it is really important to provide your family with sufficient coverage.
- When you become a parent: Becoming a parent is one of the ecstatic feelings in this world. It is every parent's dream to give their child a great education and a lifestyle where they would live the best life. Therefore, it becomes very important to invest in term insurance at this stage as you would want your child to progress, prosper, and live a comfortable life despite your absence.
In conclusion, these are the various stages in life where you need term insurance. So irrespective of whether you are single, married, or a parent, ensure that your family has financial stability even in your absence.