People generally consider buying life insurance when they get married or plan to have children. But in reality, there is no right age to buy a term insurance whether you are 18 years or 65 years, having a term insurance is always beneficial. In this blog, we will talk about why term insurance is important for you even if you are single.
What is a Term Insurance?
Term insurance meaning having an agreement between the policyholder and the insurance company. And in case of the unfortunate death of the policyholder, the nominees of the policyholder get the sum assured.
Reasons to Buy Term Insurance even if you are Single
Here are some of the reasons for buying term insurance for singles:
Term insurance is for everyone
People often have a perspective of not having insurance when they are young and single but it is not true. Single and young individuals can also have dependents like siblings or aged parents who are dependent on them. That’s why it is crucial to have a term plan for singles to support your parents or sibling financially if you meet an unfortunate death.
Term Plans are Cheaper When You Are Young
The minimum age to buy a term plan is 18 years and term plans are cheaper when you are young. You can avail of a higher sum assured with comparatively less premium, hence it is a smart decision to buy term insurance when you are young.
You have Liabilities
You may have some existing debt that is yet to be settled such as a home loan, education loan etc. The burden of the loan would fall on your family if you meet with an unfortunate death before you settle them. Hence it is a good decision to buy term insurance to make sure your liabilities are not passed on to your family because having a term plan will give death benefits to your family in case of your absence.
Single Parent
Term plans are a must for single parents because they secure the child’s future in the absence of themselves. Taking care of the child as a single parent can be tough and having a term plan gives you peace of mind that if something happens to you, your child has a financial backup option.
Term Insurance Covers Your Health As Well
Term insurance is also helpful if any illness is discovered to you. You can also add riders to your term plan such as accident riders, critical illness riders, premium waivers etc. In this way, you are protecting yourself financially too.
Tax Benefits
Apart from the financial benefits, term insurance also offers you tax benefits. Term insurance is eligible for a tax deduction on premium payments of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act 1961. Similarly, Section 80D gives you tax benefits of up to Rs. 25,000 in critical illness benefits.
Term Plans are Easy to Understand
Term insurance policies are easy to understand and hence they are preferred by many individuals. And it is easy for young professionals to understand the term plans and buy them.
Things to Keep in Mind When Buying Term Insurance in India
Term Insurance Calculator
A term insurance calculator is a tool that helps you find out the coverage amount depending on your lifestyle and is a good tool to plan your term insurance smartly. Having a life insurance policy of 10 times your annual income is recommended to face inflation.
Select Riders Wisely
Riders are crucial to providing additional benefits in your term insurance. There are different riders such as accidental death rider, permanent or partial disability, critical illness, premium waiver or income benefit rider. You can select a rider based on your requirements.
Claim Settlement Ratio
The claim settlement ratio is an indication of the chances of getting a reimbursement from the insurance company when you claim your insurance. Every insurance company showcase their claim settlement ratio. As a benchmark, you should select an insurance company having a claim settlement ratio of more than 80%, higher it is better.
Choose Between Single Premium and Regular Premium Policies
When you buy your term insurance, you may have to select between single premiums or recurring premiums. In a single premium, you have to pay the whole premium upfront for a year while in regular premiums, you have to pay the premium in regular intervals which can be monthly or in a quarter. You must compare the benefits and limitations of both plans and then select the one suitable for you.
Coverage Amount
Before buying term insurance, it is crucial to find out the coverage amount. While calculating it from the term insurance calculator, you must key in your monthly expenses, financial goals, liabilities etc while calculating the coverage for you.
Conclusion
As a result, term insurance not only protects your family but also safeguards you financially. Moreover having insurance provides you with peace of mind that your family is financially covered in your absence.