You can consult any financial expert, and they would say that buying a term life insurance policy is integral to sound financial planning. Think about it, your family members may be fully dependent on you for their well-being and protection. In the event of an unfortunate incident, the term insurance policy will give your family financial security, help them take care of their everyday needs, and provide financial stability.
Let us look at why term insurance is a must-have financial tool in your portfolio and how it ensures your family’s financial security.
Serves as an income replacement for your family
If you are the only earning member in your family, your loved ones will depend entirely on you for livelihood and future aspirations and goals. If something happens to you, they may not have the financial support. So, it is your primary responsibility to arrange an alternate resource to help your family take care of present and future needs in your absence.
This is where a term life insurance policy plays a vital role. When you purchase term insurance, you agree to pay a predefined premium for a particular term. In return, the insurance company promises to offer the sum insured to your family in case of your unfortunate demise during the policy period. Thus, it can serve as an income replacement for your family.
Pay off the debts
You may acquire certain debts like a home loan or credit card bills during your lifetime. Suppose, you pass away without repaying the debts. In that case, the repayment burden will fall on your family members, and without any income source, they may face immense financial distress.
This is why it is paramount to purchase a term insurance policy for your policy at a young age. Your family can use the death benefits of the policy to repay the debts and be financially independent.
Covers the child’s education cost
As a parent, securing your child’s future would be one of your primary concerns, right? But imagine what will happen to them and their future aspirations if you are not there to provide for them. You know unfortunate incidents can happen anytime, but that should not stop your child from living the life you want them to live.
If you have term insurance coverage, you need not worry about your child’s education costs and future career prospects. Your family can use the payout from the policy to take care of their educational needs and empower them to accomplish their life goals.
Reduces your annual tax liabilities
As soon as you start earning, you become eligible to pay income tax to the government. Paying taxes is also your primary responsibility towards your nation. However, without proper financial planning, the taxes can take away a significant portion of your income that you can easily save otherwise.
One definitive and easiest way to reduce your annual tax outgo is to purchase a term insurance policy. The premium you pay for the policy is eligible for a deduction of up to Rs. 1.5 lakhs under Section 80C of the Indian Income Tax Act.
Thus, term insurance helps you secure your financial future in more than one way. So, if you don’t have term insurance coverage yet, purchase a suitable policy now and give your family a secure future they deserve.