How to improve your financial health with term insurance?
Term insurance is a long-term financial product that requires long-term commitment, and that is why premiums of term insurance are often looked at as a liability. Term insurance premiums are required to be paid regularly throughout the policy period by the policyholders to keep their insurance active. In the long run, this regular payment of premiums is looked down upon for hampering the financial condition of the home as you need to shell out a considerable amount towards paying the premiums. But the fact is term insurance helps secure your family’s financial future.
This can be looked upon in two ways: paying the premiums towards the term insurance policy and receiving the premium back at the end of the policy tenure when the policy matures. Both ways your financial health gets improved.
Paying Premiums Periodically
If you are paying premiums regularly, it can help plan your finances significantly in the present and the future. The amount you pay and the frequency you opt for to pay term insurance premiums determines how well you will be able to plan your finances and manage your financial health. For instance, premiums towards term insurance can be paid in four ways – yearly, half-yearly, quarterly, and monthly. You, as a policyholder, can opt for any frequency as per your feasibility. However, choosing a monthly premium payment frequency can turn out to be expensive as compared to yearly payment or through any other way. Similarly, the premium paid quarterly will be more expensive than paying the premiums half-yearly. Therefore, paying a yearly premium is considered to be the most economical option.
In simple words, the lesser the number of times the premiums are paid towards the term insurance, the lesser the overall expense you have to incur. On the other hand, if you pay premiums a higher number of times, it will automatically prove to be more expensive while making you spend more money on the premiums, which might not be good for your financial health. The ideal way is to pay the premium once a year. Moreover, you can improve your financial health by reducing the premium amount of your term insurance. As you will be paying less towards the premium, you will be saving more, further boosting your financial health.
You can also reduce your premium by keeping yourself fit and healthy. Your term insurance policy will even fetch lesser premiums if you do not smoke or drink. Another interesting way to save money is by buying your term insurance online. In such a case, the insurer offers a better discount on your term insurance premium.
Receiving the Premiums Paid
Another way to boost your financial health is by opting for term insurance with a return of premium wherein in case the policyholder outlives the policy term, he or she gets back all the premiums paid at the end of the policy tenure. It is a great option for those who are looking for a return on their term plan. Term insurance with return of premium offers life coverage as well as maturity benefit. This product has gained popularity among the policyholder due to its return of premium factor. It acts as an additional income along with investments that you have planned for a secured future. Investing money in term insurance makes it a saving instrument for your uncertainties.
Tax Benefits
The premiums paid towards the traditional term insurance policy or Return of Premium policy are eligible for tax exemption under section 80C of the Income Tax Act, 1961. In addition, the death benefit amount paid to the policy beneficiary also comes with no tax deduction under Section 10 (10D) of the Income Tax Act. This, in return, helps in saving money while further boosting your financial health.
Therefore, you should carefully choose a term insurance policy before deciding to buy it. It would help if you took ample time to go through all the terms and conditions of a term plan and then opt for the one that matches your requirements. Consider choosing the one that helps you improve your financial health while offering a comprehensive life cover from uncertainties of life. Then, buy the term insurance plan, which plays an essential role in your financial planning in every stage of your life.
