How Term Life Insurance Can Secure Your Family's Future

Thursday, 9 January 2025, 10:23 am
Article: Hugh Grant

Who doesn't want to secure the financial future of their family? However, what approach one should take remains a challenge. This article explores how you can provide financial security for your family with the help of a term insurance policy. You’ll also learn the death benefits of a term insurance policy in detail.

What is Term Insurance?

Term life insurance is a type of life insurance that provides financial coverage for a specific term (duration). It is a budget-friendly way to ensure the financial security of your dependents. Selecting an affordable term insurance policy that adequately covers your family's future financial requirements is always prudent.

Here are some key benefits of term insurance to consider:

• The premium cost of term insurance is significantly lower than that of traditional insurance plans.
• Most insurers in India offer the possibility of adjusting the sum assured (coverage amount). For example, you could start small and make adjustments when crossing essential milestones such as educational investments in children, marriages, etc.
• Term insurance provides a flexible coverage period. You can choose coverage for a fixed period, say, 10, 20, or 30 years, based on your financial goals.
• Many insurance companies permit you to add different riders to your term policy, such as critical illness coverage, accidental death benefits, or waiver of premiums in case of disability. Such riders increase protection on a specific basis.
• You could opt for monthly, quarterly, or annual premium payments, depending on your budget.
• Timely premium payments ensure your policy remains active and your loved ones stay protected.

Premiums paid for term plans are tax deductible under Section 80C up to 1.5 Lakh. The death benefit received by beneficiaries is generally tax-free under Section 10(10D) of the Income Tax Act.

Understanding Death Benefits of Term Insurance

A term insurance policy offers a shield for your family's financial future. This financial shield comes in the form of death benefits. The payout extended by the insurer to your dependents can cover expenses such as repayment of outstanding debt, daily expenses and more.

A death payout is a tax-free guaranteed payment your dependents are entitled to receive in case you pass away. It is essential to remember that the dependents must apply within a specific time frame. Although this time frame varies across insurers in India, in most cases, the dependents receive the payout within 30 days after applying. Some insurers also extend death benefits for terminal illnesses and accidental deaths.

Applicability of Death Payouts

While accidents are usually included in the reason, intoxication and drug overdose cases are not, most policies also cover suicides with some applicable conditions.

Filing a Claim

Informing the insurer is the first step your dependents or families should take after the unfortunate incident. The next step is to get a claim form and complete all the details. The most crucial part is to submit the completed application form along with documents such as the death certificate, medical history of the deceased, and the policy contract.

Once all the documents are submitted, your dependents are legally entitled to receive the death benefits. Only in complex cases could this duration extend up to six months.

Conclusion

A term insurance policy is a financial security shield for your family that would protect your family's monetary requirements after your death. Once the claim process is initiated, it can take up to thirty days for the insurers to disburse the death benefit in the primary beneficiary's bank account. Remember that the duration for disbursing the death benefit may vary depending on the insurer and the complexity of the claim.

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