Why 1 Cr Term Plan is Important for Family?

A term plan is a type of life insurance plan that provides insurance coverage against death and other eventualities to the loved ones of the buyer/ policyholder of the term plan. The insurance coverage is in the form of a monetary pay-out called a death benefit or sum assured. The death benefit received is given in exchange for periodic premium payments throughout the term plan to the policyholder's family on their demise.

The benefit amount is many more times than the premiums paid. It aims to provide financial support to the family members left behind so that they can continue to lead their lives without any stress of money. Usually, you can choose the death benefit amount per your needs, budget, and other preferences.

However, many financial experts recommend that a term plan with a sum assured of at least ₹1 crore is sufficient to sustain your family’s needs. Read on to know more about a 1 cr term plan for a family and its benefits.

What is a 1 Cr Term Plan?

A 1 cr term plan, or term policy, is a term insurance plan that offers a sum assured/ death benefit of ₹1 crore. The nominees (chosen family members) of the policyholder receive the 1 crore benefit amount on their unforeseen death.

They can use the death benefit to continue to lead their lives and not take any emotional or monetary stress. Financial experts and insurers often recommend taking a term policy with a minimum sum assured of at least 1 crore, if not more, because the said figure has multiple benefits.

What are the Benefits of a One Crore Term Plan?

Here is the list of benefits of a 1 crore term plan:

• Inflation-adjusted sum assured
  

  One of the best benefits of a one-crore term policy is that the amount of ₹1 crore can beat the effects of inflation. Inflation is the continuous rise in the prices of goods, services, and other commodities.
  
  The inflation rate keeps changing for different sectors, but the average rate ranges between 6%-8%. So, your current income will not be enough to sustain your loved ones ten to twenty years down the line. But a term plan with a one-crore pay-out will be much more than what you pay for it.

• Affordable premiums for term plan
  

  Term plans are already one of the most affordable insurance products available. Add a term policy of ₹1 crore and see the premiums go lower. Moreover, if you buy the term plan when you are young, the premium rates are even more inexpensive.
  
  One of the biggest reasons investors prefer term plans is because of the high sum assured paid in exchange for cheap premium rates. That way, you and your cherished ones can get the security they require without breaking the bank.

• Financial support for both the income-earner and homemaker spouse
  

  Term plans are not only for the sole or co-income earners of a family to buy. You can even get them on behalf of the homemaker spouse. While income earners bring the bread to the table, homemakers ensure the table and everything behind the scenes run smoothly.
  
  Nowadays, the financial cost of traditional home services like childcare, cooking, cleaning, and other home duties is high – things the homemaker does for free. But in their absence, you might need a term plan to hire help for their responsibilities.

• Payment of pending loans or debt through a term plan
  

  With a term plan of ₹1 crore, you can repay any pending loans or debts on time. Instead of relying on your savings and investments, you can use the sum assured received to pay your instalments from time to time.
  
  You won’t have to compromise on your dreams and give up purchases like a vehicle or desired home or crucial experiences like higher education or marriage. You might think that a group term life insurance plan will be enough to repay your debts, but the sum assured in such insurance plans is always minimal.

• Additional rider protection under the term plan
  

  With a term policy of 1 crore, riders can be added for added protection. The riders can protect your cherished ones against financial liabilities from life-altering and threatening eventualities like accidents, physical injuries/ disabilities caused by an accident, critical ailments, terminal diseases, job loss, and the like. The protection is in the form of an extra benefit amount given over and above the base 1 crore sum assured under the term plan.

• International validity of the 1 cr term plan
  

  The best part is that a 1 cr term plan can be valid even outside the geographical limits of India, provided the validity is clearly mentioned in the terms and conditions of the term policy document. So, even if your family gets left behind by your unforeseen demise in a foreign country, rest assured they will receive the death benefit promised under the term plan.

Tax Benefits under the Term Policy

You get several tax benefits with a term plan under these provisions of the Income Tax Act, 1961.

• Under section 80C, you can claim back a percentage of the premiums paid by you towards a term policy as tax returns. In a year, you can claim up to ₹1.5 lakh.
• Under section 10 (10D), the death benefit amount your family will receive will be exempt from tax deductions.
• Under section 80D, you can claim an additional deduction of up to ₹25000 for the premiums paid towards term plans with an added critical illness cover.

To Conclude

A 1 crore term policy is crucial to keep your family secure in the aftermath of your permanent absence. Your loved ones can continue to achieve their goals like getting married, finishing their education, travelling the world, and remaining prepared for any emergency. Financial security is one of the most meaningful gestures of love and care, so why wait to give your cherished ones the gift of financial protection? To know more about ulip plan, retirement plan, long term savings and more visit PNB MetLife website.