What is term life insurance?

Term insurance is the simplest form of life insurance that helps you ensure your family will be financially secure even if you pass away unexpectedly. 

Here's how it works:
 

• You pay a fixed amount of money called the premium to a life insurance company 
  
• You pay this amount for a fixed period of time called the premium payment term
• The term plan will cover you for a fixed period of time called policy term
• If you pass away during the policy term, the insurer will pay your family the policy amount also known as the life cover

Simple, right?
 

Now even if you are no more, your family will have a safety net that will help them overcome any financial struggles in your absence, especially if they are financially dependent on you. 

Here’s how term insurance works:
 

• You pay a fixed amount of money (called premium) for a fixed period of time (called premium payment term)

• Your policy covers you for a fixed period (called policy period)

• If you pass away during the policy period, your family receives the life cover as a payout

This payout can be used by them to overcome any financial difficulties that may arise after you pass away (such as loan repayment or maintaining their current lifestyle). 

The features of term insurance are as follows: 
 

• Life cover: You can choose your sum assured. This will be the payout made when you pass away during the policy period.
• Policy period: You can choose how long you want to get covered by the plan.
• Add-ons: You can get additional coverage by adding riders (such as critical illness or terminal illness) to your term plan
• Premium payments: You can choose how you want to pay your premiums (for example, in one go or over a period of time).
• Payout: You can choose how your family receives the life cover (for example, as a single payment or monthly payments). 

Not everyone requires term insurance. But, if you are an earning individual and have loved ones who depend on your income (such as for their living expenses or education), you should strongly consider getting a term plan. 

Things may be going good as long as you are earning but what will happen if you were to suddenly pass away? Your family may have to overcome financial difficulties in such a case. A term plan’s life cover payout can help them in overcoming those difficulties.

What’s more, term insurance can protect the financial future of your loved ones in an affordable way.

Know if you need a term plan. 

Before you buy a term plan you need to ask yourself these important questions: 

• How long should I be covered?

• What should be my life cover?

• Should I add any riders? 

• How should I pay my premiums?

• What payout option suits my loved ones the best?

Don’t worry, you can get clarity on them easily through the KlarifyLife Term Guide.

Anyone who is earning and has loved ones depending on their income should consider getting a term insurance policy.

Find out if you need a term plan.

If there are family members who are financially dependent on you, you will not want them to suffer financially after your demise. 

Term insurance will help you ensure your family can meet their regular expenses, pay off debts if any, enjoy a certain standard of living and life, and fulfil all their life goals. 

Let’s see an example of how -

• Say, you have bought a house with a home loan
   

• But before paying off the outstanding loan, you pass away suddenly
   

• A term policy will pay your family a lumpsum insurance money after your death
   

• They can use it to pay off any financial liabilities like the home loan while meeting their expenses and maintaining their standard of living
  
  Learn why should you buy term insurance.

Simple! The best time to buy term insurance is when you start earning. 

Even if your salary is a little low, you will be able to afford it because term insurance premiums will be very affordable given your age. 

And that brings us to the next recommendation - Always buy term insurance early in life. 

As you grow older, you are more likely to have a lot more health issues and poor lifestyle habits. Result: Your term insurance premiums increase with age and changes in health status.
 

By buying term insurance early, you can save big bucks on premiums!

Learn more about when to buy term insurance.

Absolutely not! Term insurance is actually the least expensive way to secure your family’s financial future. You can get a life cover of ₹ 1 cr for as low as around ₹ 500 per month - it costs less than having dinner at a nice restaurant! 
 

Don’t let this myth keep you from buying term insurance. Do your own research to see how affordable term insurance can actually be. 

That’s great! It’s good that you are growing your wealth through savings and investments. But for your financial plan to actually materialize, you will have to keep investing. If you pass away suddenly, your plan will crumble.

Result? Your family will be in a financial crisis because you have not accumulated adequate wealth by the time you pass away. This is where term insurance comes in useful. 

It is the backup to your financial plan that will help your family live life on their own terms in your absence. This is why you need to buy term insurance over and above having a financial plan. 

Ok, no problem! Your life, your choice. 

But think about it this way, even unmarried people have loved ones they want to take care of, right? So even if you don't have a spouse and children, you may have other family members financially dependent on you. Your parents, especially if they have retired. Your siblings. Or any other close family member. What happens to their financial security in the event of your unexpected demise?

A term plan can help you secure their financial future. You got your answer, right?

Well, you should buy term insurance to secure your family’s financial future in your absence. But the tax benefits* that come with your term plan are an additional incentive. 

These are the tax benefits* you can get with term insurance:

• Deductions under Section 80C - You can get deductions of up to ₹ 1.5 lakhs under Section 80C, for the premiums you pay towards your term insurance
   

• The benefit under Section 10 (10D) - In the event of your death, your nominees receive the insurance money which is completely tax-free 
   

• Section 80D - You can also avail of a tax deduction of up to ₹ 25,000. This means you’ll be paying lower taxes! But remember, you only get this benefit on the premiums paid for a term plan with health related riders like a critical illness rider

So yes, if you are planning to save some tax and secure your family financially, you should consider buying term insurance.

_{*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law}

Your father did the smart thing and got term insurance to protect his family. God forbid, if something happens to him, you and your family will now be financially secure. 

But what will the situation be after his death, especially if you become the only earning member of your family? That’s why you too need term insurance so that your remaining family members stay financially secure in your absence. 

Of course! It keeps your family financially secure in your absence. 

Even if you do not die (yay for that!), it will bring you peace of mind knowing your family will be taken care of even if you are no more. 

See, they will mourn your sudden demise. But imagine them facing financial struggles on top of that! You wouldn’t want them to be in this situation, right?

You can gift your loved ones a lumpsum insurance amount by paying really low premiums. Isn’t that absolutely worth the cost? We think so too!