The coronavirus pandemic has rattled the globe, which has forced everyone to take stock of their priorities. The current uncertainties of life have once again highlighted the necessity of having a financial safety net.
With 70 million sick persons and nearly 1.5 million fatalities worldwide, the pandemic has indeed emphasized the need for term life insurance. A term policy provides the insured with life insurance for a certain amount of time.
The insurance company pays the insured’s nominee the death benefit in the event that the insured person passes away within the policy’s term.
A Little About Standard Individual Term Life Insurance Policy
All insurance companies must start offering the “Saral Jeevan Bima” standard individual term life insurance policy beginning in January 2021, according to a regulation issued earlier this year by the insurance regulator IRDAI.
There are several possibilities available from various insurers, and according to IRDAI, the objective is to create a product with “basic features and uniform terms and conditions.”
- In accordance with IRDAI regulations, this typical individual term policy might only provide a pure risk cover, paying the agreed-upon sum in a lump sum to the designated beneficiary in the event of the insured person’s passing within the term policy period. The guaranteed amount may range from ₹5 Lakhs to ₹25 Lakhs.
- The death benefit under this typical individual term policy is likewise spelled out in detail by the IRDAI. Under this strategy, there is no maturity reward or benefit.
- With this policy, the term can range from 5 to 40 years, with a 70-year-old maturity age as the maximum. There are three ways to pay the premium: regularly, once, or with a five or 10-year payment term restriction.
Benefits of Standard Individual Term Life Insurance Policy
All people, but notably those who have dependents, can benefit from term life insurance. Depending on the policyholder’s salary and the specified sum guaranteed, the insurance payment may be able to replace lost income in the event of death.
This implies that the family may carry on living their normal lives even after the family’s primary breadwinner has passed away. A term plan’s main benefit is to give you a life insurance policy, but it also has some additional advantages.
- Tax Benefits
Tax advantages are associated with term insurance plans. In accordance with the requirements outlined in Section 80C of the Income Tax Act of 1961, you may deduct the premiums you pay for your insurance plans up to ₹1.5 Lakh annually.
Additionally, under Section 10 (10D) of the Income Tax Act of 1961, the death benefit given to the nominee in the event of death is exempt from tax subject to the rules outlined therein. Although having term insurance is not necessary for tax reasons, it does provide this advantage.
- Budget-Friendly Premiums
Term insurance plans have considerably lower rates than other types of life insurance. Additionally, the premiums you must pay will be less the earlier you get a term policy. As a result, these programs are simple to include in your financial portfolio and bring significant value without straining your monthly spending plan.
Visit here to calculate term insurance premium.
Therefore, a term life insurance policy is a must for everyone, whether they select the common individual term insurance plan or another term policy that better meets their unique needs. One thing in life is certain: your loved ones’ futures are safe. This is something you can count on.
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