Imagine how your family will cope up with financial liabilities if you were to to die tomorrow or say in next 3 years. How would they pay the home loan or take care of basic family expenses? You should consider term insurance if you are concerned about how your family would manage in the event of your unexpected death.
Term insurance pays out a fixed sum to your family on your death.
Term insurance plans will typically not pay out if the death was due to suicide, alcohol or drug abuse, participation in war or terrorist activities etc.
The amount of insurance depends on your personal situation. Generally experts suggest a cash sum equal to ten times of your annual income.You might want a term cover just to cover your pending home loan or you want to cover for an amount that will cover your family's future expenses including marriage of your children or their education. While you may decide to go a very high cover, you also need to consider your annual premiums. With term covers getting cheaper, one should go for a slightly higher covers.
This depends on length of your home loan or the duration till which your children will be dependent on you. One need not go for very long duration cover( beyond age 65) unless your situation demands the same.
Term insurance is a function of age, duration, gender and whether you are a smoker or non smoker. Upto a cover of 25 lakhs, there is not much difference between the rates but as you tend to go higher the differential between a smoker and non smoker increases dramatically.
Most insurers would offer fixed premiums, so the price of cover remains fixed throughout the contract.
Younger people pay less for their term insurance. Non smokers also pay less for their policies. So one way to reduce would be to quit smoking. The longer the duration of the policy and the bigger the sum assured, the more premium you pay.
You need to be honest with your insurer about your medical situation and disclose all the details sought by the insurer. You should preferably go for a medical tests. You might end up paying more for your policy but if you hide things your claim is very likely to be rejected. In that case, your family won't get any benefits upon your death.
Most of firms offer term insurance for older people but please note that the premiums would be much higher and you will have to undergo a lot of medical tests.
It is better to keep it simple.You can buy a separate critical illness or accidental insurance.
You get normal tax benefits under section 80C (up to 1 lakh limit). The premium paid gets deducted from your taxable income. One should just consider this as an added benefit. The prime reason for buying term insurance should be to protect your family.
The cash benefit of a term insurance policy is not liable for income or capital gains tax.
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