Why invest in term insurance plans in 2020
2020 has been a rollercoaster for all of us, isn’t it? We’re almost halfway into 2020 and there seems to be a new surprise every day. And while some surprises are great, some might just turn our lives upside down, just like Coronavirus did. Having a financial cover during such stressful times can be of great help. Those with investments would find it a little easier to cope with the current situation. Therefore, investments are a must.
Talking of investments, there are tons of options available in the market today. From the share market, mutual funds to online term insurance, you put your eggs in different baskets to make sure stability and profitability. Many experts recommend term insurance plans as a key investment in 2020 financial planning, here’s why:
Large sum assured: Term insurance policy is a type of life insurance that provides huge cover in case of the demise of the insured. However, if the insured survives through the term period then he/she will not get anything. The premium for this type of policy is comparatively lesser and it offers a huge sum assured.
Family protection: Let’s say in an unfortunate event, the head of the family loses his life. There are four other members and all were dependant on the head of the family. Now, after his death, how does the family continue to live the same way? If the deceased person had a term insurance policy, then the family would be left with enough financial support until they figured an alternate means of earning money. Maybe, they could use this money to start a business that supports them further.
Income tax benefits: Online term insurance policies don’t just offer death benefits, but also allow you to claim tax benefits today. Section 80C of the Income Tax Act, 1961, recognizes and allows the premium paid towards online term insurance or term insurance plans as a deduction. The upper cap on the deduction is set at Rs. 1,50,000.
Terminal illness: Some online term insurance policies cover terminal illnesses and disabilities. This means, that if you are detected with a critical illness, then you won’t be required to pay the premium anymore and you will receive the sum assured as promised at the time of purchase. Similarly, in case of partial or complete disability, you will be entitled to receive the entire sum assured if your policy clause states so.
Increased value: some term insurance plans have a structure where the sum assured increased by a fixed percentage every year. The premium may remain the same, but the sum assured is hiked. This is good, keeping in mind the increasing level of inflation.
These were some of the reasons why term insurance plans are great, even in 2020. While there are other investment instruments that are definitely promising, adding term insurance to your financial portfolio is a must. Not just for you, but also for your family. We urge you to stay indoors and stay safe.
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