The financial responsibilities of a person can change from time to time. For instance, goals like children’s education, their wedding, and buying a bigger house can vary according to the different stages of life.
In many cases, you may even have to take a loan to fulfill your monetary aspirations. However, have you imagined what happens if an unfortunate incident leads to your untimely absence? How will your family meet all the expenses? How will they repay the loans? Therefore, safeguarding your family’s economic future should be your top priority. So, investing in a life insurance plan should be the first thing in your financial portfolio.
It is advisable to invest in term insurance plans in India, as they offer high sum assured at an affordable premium. If you are planning to buy a term plan while dealing with financial liabilities, then here are a few things to consider.
- Ascertain your needs
Determine your requirements before buying a term insurance plan. For example, if you are dealing with outstanding debts and suffering from any medical condition, it is essential to buy a term plan with a critical illness rider. The rider can prove valuable in the time of need. As no one knows what the future holds for you and when will a financial emergency strike, such money can help you reduce the financial burden. While investing in a term plan, ensure that you align the policy’s tenure as per the duration of your financial obligations, such as loans.
- Get a high life cover
The sum assured plays a pivotal role in determining your family’s financial stability when you are no longer around. It should act as an income replacement tool and must be sufficient to help your family to meet the day-to-day costs and medical expenses as well as achieve their short-term and long-term objectives. However, what should be an ideal sum assured? Ideally, it should be at least 20-30 times your annual income. Before ascertaining the sum assured for your term policy, it becomes vital to ascertain your financial position. For instance, if you have liabilities like a house loan, personal loan, and car loan, and the sum assured is lesser than the total value of your debts, then your family will have to bear the strain of repaying your loans. In such circumstances, they will be left with no money to lead a financially independent life.
- Reduce your tax liabilities
One of the best term insurance benefits is that you can avail of tax deductions under various sections of the Income Tax Act, 1961. As per Section 80C, you can seek a maximum deduction of INR 1.5 lakh per annum for the premium that you pay towards your policy. Additionally, the sum assured received by your nominees is tax-free as per Section 10 (10D) of the Act. So, with a term policy, you can end up saving a significant sum in the long run.
The monetary security of your family members is completely dependent on the sum assured that you select. You cannot go wrong here, as it can make it difficult for your loved ones to make ends meet, especially if you are the sole breadwinner of the family.
Understandably, you may have taken loans to fulfill your family’s wishes, like buying a house or car or taking them out for an international holiday. However, as a responsible individual, make sure that your dependents need not take the stress of paying the monthly installments and end up facing a financial crunch. So, without any delay, buy suitable term insurance plans in India and provide the much-needed financial protection to your dear ones.