A term life insurance plan is an investment to protect the future of your family. Life is way too uncertain to leave things to chance and purchasing the best term life insurance can change your life as well as that of your loved ones.
How to determine the best term insurance plan for your family?
Given the variety of policies and the term insurance rax benefit options, it can be a struggle to pick the best term life insurance for you. So, here are a few things to consider when choosing the right term plan for your benefit:
- Take a hard look at your finances –
Examine your income vs expenses. The expenses will show you how much money, i.e., the sum assured would suffice to take care of your loved ones for a few months in the event of your death. Based on the figures, you can determine the sum insured, as well as if you want your beneficiaries to receive a lump sum payout as a death benefit or in monthly instalments that constitute a steady income. - Consider the amount of debt you have –
If you have a large amount of debt, then you need to choose sufficient sum assured. The death benefit will assist the beneficiaries in making repayments to lenders as well as set aside some money for their personal financial planning. A decreasing plan may be the best term life insurance for you if you have a lot of loans, mortgages, and debts. - Evaluate your lifestyle and habits –
If you lead a healthy life with a nutritious diet, avoid vices, exercise regularly, and have not been diagnosed with any serious illnesses, then the likelihood of your surviving the tenure of your policy is high. Return to premium is perhaps the best term life insurance plan for you.Of course, life is still full of uncertainties, but if you are moderately certain that you will survive the tenure, you may want to invest in a term plan that will return the premiums you paid upon maturity. That way, you have a lumpsum money to reinvest in term life insurance, the market, real estate, or whatever suits your fancy at the time. - Contemplate the changing needs of your beneficiaries –
The rate of inflation will affect your payout regardless of whether it is 5 years or 15. If you feel that the needs of your beneficiaries are likely to grow, such as in the case of children who will need higher education, marriage expenses, or your spouse or parents’ retirement plan, then you need to plan accordingly.An increasing policy may be the best term life insurance for your beneficiaries. The sum assured increases every year that you survive the policy, therefore, the amount that your beneficiaries receive will be higher than what you estimated. It should compensate for the rate of inflation to a large extent. - Assess the term insurance tax benefits –
Term insurance plans offer excellent tax benefits which are as follows:
- If you subscribe to the old tax regime then you can deduct premium payments up to INR 1.5 lacs as term insurance tax benefits under Section 80C.
- If the premium is less than 10%of the total sum assured (even for increasing term insurance) then you can claim term insurance tax benefits.
- If you or the person insured has a disability listed under Section 80U, then you can claim term insurance tax benefits if the premium is less than 15% of the sum assured.
- If you or the insured individual has a disease listed under Section 80DDB, then you can claim up to 15% of the sum assured towards the premium annually.
- For pure-term policies, your beneficiaries will be exempt from taxes on the sum assured that they receive as the death benefit.
Term insurance tax benefits can be an excellent source of saving money while securing the future of your loved ones.
6. Estimate for future planning –
If you wish to employ the best term life insurance plan to take care of you in your golden years, you can choose the retirement plan. The policy works similarly to other plans wherein you pay the premium on a timely basis and insure your life for a certain tenure. Upon retirement, you may receive a lumpsum amount of money or employ a monthly income scheme. In either case, your elderly years will be spent comfortably.
There are a number of term insurance plans but you only need the one that works best for you and your loved ones.
Conclusion
Choosing the best term life insurance is very important. You must take your financial situation into account when choosing the plan. It wouldn’t help if you chose a high sum assured to secure your family’s future but failed to make premium payments. Instead, evaluate your finances and take a realistic approach. Choose the term insurance tenure based on your lifestyle, health and habits. Choose the type of best-term life insurance based on the financial needs of yourself and your loved ones. Determine the sum assured with the beneficiaries’ actual necessities in mind.
Fidan Aliyeva is a VP of R&D for ztudium. She is specialised in leadership, strategy, Innovation, People Management, behavioural economics, digital transformation. She writes for intelligenthq.com, openbusinesscouncil.org and hedgethink.com. Fidan Aliyeva’s background experience is in senior level leadership, project management, having coordinated operations for ztudium holdings and its multiple platforms and projects since 2011. With a career background in international Energy, Oil and Gas industry, Fidan has been working with big energy Multinationals close to CEOs and Boards project managing global projects. Fidan has an MBA in Oil and Gas Management from the University of Dundee, Scotland. In the last years she has been working, researching and writing about micro and macro trends in business, energy, oil and gas industries. She has a passion for leadership, strategy, geopolitical, environmental, tech and other global regulatory concerns with interest in behavioural psychology. Her current study involves EnioStyle – brand new socio-cultural theory on informational metabolism, psyche-typing, energy-informational exchange between people and nature based on analytical psychology, neuro-linguistic programming, transactional analysis and socionics. Application of EnioStyle to business challenges as a decision-making technique – is her new frontier for exploration.
