The uncertainty of life created due to the ongoing coronavirus pandemic has made people realize the need of investing in a life insurance policy. Out of the various life insurance policies available in the market, a term insurance plan is one of the most sought-after alternatives. It offers a high sum assured at an economical premium viz-a-viz other life insurance policies.
Online Term Plan: What is it and why you should pay attention?
If you are considering purchasing an online term plan, it is advisable to do so at the earliest. It is because you can start providing your family with much-needed financial security and save a significant sum on the premium before it becomes costly. The rate of mortality has risen due to this deadly virus, and with the growing requirement of term plans, the premium is expected to increase.
Additionally, the hike in the reinsurance premium is another reason behind the rise in the term plan premium. In India, a majority of insurance companies pay a reinsurance premium to a reinsurance company to re-insure their business. The revision in the rates of the premium is totally in the hands of the reinsurance company. So, if there is an increment in the rates of the premium, the policyholders need to pay a higher amount. Most likely, the term insurance premium can increase up to 40% in 2021. The premium of term plans has remained constant for a few years. So, reinsurers are seriously considering revising it.
How does the Insurance Premium Increase with age?
Additionally, the premium increases with age. When you are young and healthy, the premium will be lesser, as the rate of mortality is significantly lower compared to older individuals. It is because there is a low probability of young people getting diagnosed with life-threatening diseases like diabetes, cardiovascular disease, and high blood pressure.
An important plus point of investing in a term plan at an early phase of life is that you get it a cost-effective premium. This amount remains constant throughout the policy tenure. It means that if you purchase an online term plan with a yearly premium of INR 10,000, then the cost will be stagnant until the policy matures. Therefore, it is advisable to invest in an ideal term plan as soon as possible. The term insurance age limit is set between 18–65. So, you can buy a plan at a young age and save a large sum on the premium.
How to Select the Best Insurance Company for your Plans?
As there are numerous insurers offering term plans, it can be difficult for you to compare and select the most suitable policy that can meet your needs and financial objectives. In such a case, you can seek the help of a term insurance premium calculator. This useful tool will assist you in comparing the costs of various insurers, making the daunting task hassle-free.
When you invest in term plans right from an early age, you can start reaping the tax benefits as well. The premium that you pay towards your term plan is exempt from tax up to INR 1.5 lakh per annum as per Section 80C of the Income Tax Act, 1961. Moreover, if you have any health-related rider over and above your base term plan, then the premium paid towards such riders is tax-exempt under Section 80D of the Act. Another advantage of investing in a term plan is that the death benefit that your family receives in case of any unfortunate incident with you is tax-free according to Section 10(10D) of the Act.
The Bottom Line:
So, considering all these aspects, invest in an appropriate term plan before the premium increases and save a considerable amount in the long run. Use the term insurance premium calculator and find a plan that suits your requirements.