The only things in life that are certain are death and taxes. And we’ve heard of people evading taxes, but no one has quite managed to avoid death yet. So, it is safe to conclude that death is the only certain thing there is, and that one day we all will have to encounter it.
In life, there is risk attached with almost everything. Nothing is truly is truly safe. All of us (almost us), work extremely hard to earn the money that we do. There is risk attached with investments, there is risk attached with life, there is risk attached with almost everything that we do.
When you ask yourself why you earn money, one of your very first responses after servicing your basic physiological needs, will be that your need to provide for your dependents. Usually family members, rely on one or two people, to be the primary earners of the family. So, when there is risk associated, the burden of that risk is not only borne by the person in question, but by all his/her dependents and family members.
In this scenario, it become pivotal to safeguard this risk. And that is exactly how the idea behind insurance and insurance policies came to be. The origins of Insurance were in London, in the 1800s, where interests of certain people were safeguarded by pooling of funds.
Over the next century, the idea and services offered under the spectrum of Insurance have increased tremendously in scope.
An Insurance Policy is a formal contract or document issued to an insured party, by an insurance company. It serves the following functions:
Types of Insurance Policies in India
It is a life insurance plan that that provides financial coverage to the beneficiary after the death of the insured person, for a certain period of time.
Unlike an Endowment Plan, or a Money Back Plan, Term Insurance offers no maturity benefit. So, a Term Insurance is not an investment option. It only serves the purpose of covering your life, for a defined period of time.
That explains why the premiums for Term Insurance are so low, as compared to other kinds of insurance policies.
These days, policies are available for purchase online, and can be bought in a hassle-free manner.
Before buying a Term Insurance Policy from a company, an individual must look at the company’s claim settlement ratio, to check the reliability and credibility of the company when it comes to accepting claim settlements.
Maturity value from a Term Insurance Policy can be refused if the reason of death of a person is not explicitly covered under the policy chosen by the person.
The benefits of buying a term insurance policy or a term plan, are listed below:
In case of critical illness:
The primary disadvantage of getting a Term Insurance Policy,
is that whenever you renew the policy, the premium increase, as does the risk
of you dying. So, when you need the policy the most, it becomes more expensive.
But it makes sense from the point of view of the company, as their risk of
servicing you claim increases.
Term insurance policies come with very lucrative tax benefits. You can avail tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act, 1961. Apart from this, the premiums paid for Critical Illness Benefit also qualifies for a deduction under Section 80D.
Certain additional riders can be added to your policy in the case of critical illness or accidental death or disability. These can be added by paying an additional premium amount. Some common term insurance riders are mentioned below:
The minimum age at which you can buy a term insurance policy is 18 years of age; whilst the maximum age is 65 years of age, considering the additional rider benefits. The price of the premium of term plans increases year on year, as your age increases.
So, if you want to take a Life Insurance, and lock it in for a long period of time, you should probably get it when you are relatively younger, so that the price of premiums does not increase a lot as you grow older. So, around 30 to 35 should be the right age to take this policy- considering you will have a steady and stable income, as well as you will have dependent who rely on you financially. A policy taken at this age- is likely to last until the time you retire.
After reading this article, it must be more than clear, that you absolutely must get a Term Insurance Policy. Its benefits far outweigh its downsides. It charges a low premium, and covers the risk on your life, and promises an assured sum to the beneficiaries of the insured person. You can buy additional rider benefits; in case you want to get insured for any critical illness of accidental disability or death.
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