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You most probably have made investments to reap maximum tax benefit offered by Section 80C. But, was term life insurance one of them? If not, then, while you may have saved Rs. 1.5 lakh in taxes, you have also ended up losing Rs. 1.5 lakh.

We will come to what a term plan is and why it is important for everybody later but let’s first illustrate how you lost Rs. 1.5 lacs.

Let’s look at two possible scenarios:

  1. You buy a term plan today
  2. You buy a term plan after 5 years

Keeping in mind that the premium of the life insurance policy increases with age, you would have to pay:

Scenario 1 Scenario 2

Approx. Cost of Term Plan (A)

Rs. 10,000 per year Rs. 15,000 per year
Policy Duration (B) 30 years

30 years

Total cost over policy term (AxB) 3 lakhs

4.5 lakhs

As you can clearly see, a delay of 5 years in buying a term plan means that you can end up paying up to Rs. 1.5 lakh more which is 50% more than what you would have actually paid.

 

Now that you have seen how much you stand to lose if you delay buying a term plan today, let’s look at why a term plan should be the first investment you must make after you start your career.

Term plans are the simplest and most basic form of life insurance that provide high cover at low rates which make them a must have for every working individual. And over last couple of years they have really become popular since more and more people have come to understand the importance of securing the financial future of the family dependent on them and the ease of buying a term insurance plan online. The Government is also promoting life insurance by implementing schemes such as the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), with an aim to provide low-cost insurance cover for all, including the semi-urban and rural population.

Now, whether single or married, everyone has family dependent on them. For instance, when you are single you are likely to have your parents depending on you. If you are married, not only is your own family depending on you, but also your parents who are retired or very close to retiring will be dependent on you for financial and emotional support. There is only one financial instrument that can replace you financially and secure their financial future if you are not around. That is a TERM PLAN. A term plan pays out on the death of the policy holder, which means that the burden of repaying any outstanding loan like a home loan or education loan does not fall on the surviving members of your family.

Term plans today are so much richer – they offer add-on features like critical illness benefit, so while it gives your family financial security, it also provides you protection from certain major illnesses. Additionally, unlike a health insurance plan, the premium does not increase over the term of the policy,

The cherry on the cake is that with term plans that come with critical illness benefit, you will end up saving much more on tax than you had earlier thought you would. That’s because they offer tax savings under Section 80C & 80D. So what are you waiting for? Remember, with ever birthday you celebrate, the price of your term plan will increase if you don’t buy it now and lock in your premium. Buy a term plan online today. It’s quick, easy and affordable!

Quick Takeaways:

  • Financial Security
    • Term plans provide financial security to your loved ones in your absence be it protection against outstanding loans or as your income replacement that provides for their day to day needs
  • Critical Illness Cover
    • Critical Illness Cover in term plans act as income replacement when one is seriously ill and also in covering the increasing hospitalization costs
    • A term plan with Critical Illness benefit helps in saving tax under Section 80C & 80D
  • Instant buy:
    • Can be bought easily and instantly online with quick and simple steps right from the comfort of one’s home

Check Also : Term Insurance Plan Premium Calculator

This article was published on the Dailyhunt App.

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Dailyhunt

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