Term life insurance is a pure protection plan, which pays a predetermined sum (sum assured) if something untoward were to happen to you (the insured) during the policy term period. As the insured, you usually pay a premium at regular intervals (monthly/quarterly/bi-annually/annually) and in the event of your unfortunate demise, the insurance provider, pays the sum assured to the named beneficiary or the nominee

While you might not have absolute control over everything that happens in life, there are some things that are entirely under your control. Having a Term Plan helps you do just that; it plays a vital role in streamlining your financial planning process. If you're still not entirely convinced that you need to get a term insurance plan, thinking about these questions might help zero in on a decision:

• Are You the Sole Breadwinner of the Family?

Life is unpredictable and you never know what is coming next. If you happen to be the sole breadwinner of the family, it could have devastating consequences for your loved ones. A term plan can be used as a means to financially secure the lives of your loved ones and help them maintain their lifestyle in case you're no longer around. Whether it's for replacing lost income or meeting day-to-day expenses, term insurance helps you get peace of mind by ensuring your dependents get much-needed financial security as they would have with you around.

• Do You Have any Long-term Debts?

If you’re no longer around, the last thing you would want for your family is to deal with the financial liabilities you have left behind in times of crisis. Term insurance makes sure that any outstanding debts, whether it’s a home loan, car loan, personal loan, or a loan on credit cards, will be taken care of thus ensuring that your family is relieved of any resulting financial burdens. At the end of it, you'll be content knowing that you've done all you can to help your loved one's tide over difficult times.

• Are you looking for a tax-saving instrument?

Term insurance also doubles up as a tax-saving instrument. You may avail tax benefits as the premiums you pay are eligible for a maximum deduction of up to Rs 1,50,000 under Section 80C from the taxable income and death benefit is also tax-free ( tax exempt) under Section 10(10D) of the Income Tax Act, 1961 subject to satisfaction of certain conditions.*

• Are You Looking for a Wider Safety Net?

Term insurance plans also come packed with a bunch of riders which provide extra benefits and additional protection at a nominal cost. These riders also provide you with the flexibility to meet your changing needs, therefore, ensuring full coverage against any unfortunate eventualities. For instance, in case you meet with an accident which leads to your unfortunate demise, an Accidental Death Benefit Rider is payable in addition to the normal death benefit. Another such rider, the Critical Illness Rider helps shield policyholders from the financial hardships of care by providing an additional cover should they become permanently chronically ill.

Final Thoughts

A term insurance is a commitment to the people who matter the most in your life so it’s never too late or early to get started on one. Moreover, a Term Insurance Plan proves to be an essential part of a good financial plan so make sure you buy the right term insurance.

*Tax laws are subject to change

AN Jan 17/18

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