The common belief that there is no need for financial planning early in life is fictitious. To be financially prepared for contingencies, it is advisable to start investing once you start making a reasonable amount of money. While you may think that investing is pointless right now, remember that you cannot spot uncertainties and mishaps in advance.
For starters, you can invest in simple life insurance products such as term insurancebecause it is a lower premium and a higher sum insured. In addition, it will financially protect your family in your absence.
In this hectic life, to overcome the uncertainties it is best to purchase a full term plan for broader life coverage. Before that, it is essential to understand what is a term plan and the documents required to make the request.
A term insurance plan is a straightforward, straightforward life insurance product. The insurer grants financial compensation equal to the sum insured to your family in the event of premature death. Plus, you can get critical illness and accidental death coverage by choosing the appropriate rider options.
When applying for the best term plan, you should keep some documents ready and disclose everything in your application form to ensure a hassle-free claim settlement later.
- Proof of identity (passport / Aadhar card / voter card
- Proof of age
- Proof of address
- Proof of income
- Medical reports (To analyze your current state of health and future medical risks)
Along with knowing what you need for the best term plan, you should know in detail about term insurance benefits and the different premium payment methods.
Term insurance benefits and different premium payment methods
1. The convenience of different premium payment methods
a. Regular payment option
Under this option, you must pay your premium at regular intervals throughout the life of your policy. You can choose the intervals as per your convenience, i.e. monthly, quarterly, semi-annually, etc.
Also, if you choose this option, your premium term and policy term are the same. This is one of the most preferred options because you can spread out your premium payment and not weigh your finances down at one point.
In addition, you can cancel your policy once you have paid off all of your debts and are sure that your loved ones are financially independent.
b. Limited payment option
Under the limited payment option, you can pay the premium for a shorter period and enjoy the coverage for a longer period. Ideally, this option is beneficial for two categories of people:
For people who will retire before the plan expires
For people who have experienced a sudden increase in their income. Usually these people don’t want to pay the premium any longer.
vs. One-time payment option
Before choosing this option, you should consult an expert to get a good understanding. Under term insurance, the one-time payment option may be cheaper than the regular payment option, but this may not be the case every time, as inflation plays a big role. .
If you make your one-off payment ignoring important factors like the time value of money, you could end up paying more than what you would pay with the regular payment option.
2. Large sum insured at an affordable premium
Term insurance is considered one of the most preferred life insurance choices due to the advantage of an affordable premium. However, the sooner you start investing, the lower the premium and the higher the sum insured. Whatever the best term plan you decide to invest in, it’s always best to start as early as possible.
The premium amount may increase with age, but will remain affordable and affordable. Also, it is advisable to purchase term insurance online as it is relatively cheaper than offline insurance.
3. Easy to understand
Being pure life insurance coverage, term insurance is easy to learn and does not require a thorough understanding of market movements. However, it is essential to read and understand the terms and conditions of the policy to know the exclusions of your policy.
Sources: https: // www. Incometaxindia.gov.in/Pages/tools/deduction-under-section-80c.aspx
4. Additional benefits for runners
A basic term insurance plan has certain exclusions. To deal with this, you can opt for additional benefits to the basic coverage to have wider coverage. However, the best term plans also include a number of rider options available; find some of them below:
- Critical illness rider
- Accidental death benefit
- Accidental disability rider
- Waiver of the Premium Rider
5. Tax benefits
Under Article 80C of the Income Tax Act 1961, you can benefit from tax advantages on the payment of a premium of up to Rs1.5 lakh per year. The premium amount will be deducted from your taxable income.
While understanding and verifying the benefits mentioned above, you should not underestimate the importance of choosing a credible insurance provider.
To ensure unparalleled services and support, it is inevitable to choose a provider offering insurance products with advantageous conditions and a good claims settlement ratio. If you have any difficulties along the way, you can get help from the customer service managers.