Have you ever come across the phrase “Rs 1 crore term insurance” and found yourself wondering what exactly it entails? Why is it something you should consider? Such questions are quite common among those planning their financial future, where the concept of securing one’s life with a substantial insurance cover is gaining prominence. Term insurance, especially policies offering a cover of Rs 1 crore, has become a pivotal part of financial planning for many. But is it the right choice for you? Let’s delve into the specifics to provide a well-rounded response to this query.
A Rs 1 crore term insurance plan must be considered as soon as possible by young professionals, primary breadwinners of families, parents, and anyone with a number of financial liabilities, such as housing loans, auto loans, personal loans, or business loans. This is because the earlier you purchase term insurance, the less premiums you have to pay. In addition to this, the Rs 1 crore cover ensures that your family is protected financially even when you are not physically present.
Choosing to obtain a Rs. 1 crore term insurance policy is probably one of the smartest financial decisions you can ever make. It provides you not just mental peace but also protection against life’s uncertainties to secure the finances of your family members. Here are the key reasons to select Rs 1 crore term insurance cover –
- Adequate financial security
Imagine a family where the primary breadwinner earns 1 lakh in a month and supports his wife, two children and aged parents. When the family’s breadwinner dies suddenly, the family may encounter an immediate financial crisis. A Rs 1 crore term insurance payout can function as a financial cushion so that the family doesn’t have to worry about paying for the daily expenses of their children’s education or their parents’ healthcare. Such an amount can simulate the income of the main earner for several years, sustaining the family’s standard of living without negatively impacting their long-term objectives.
- Affordability
Let us imagine that there are two people of the same age. One selects a lower coverage traditional life insurance policy, and the other chooses a 1 crore term insurance. The individual who has term insurance may only pay around thousands of rupees annually as a premium, which is much less compared to the amount the person with a traditional life insurance policy pays. This difference in cost makes term insurance highly accessible, allowing even those with a modest income to secure sizable coverage for their dependents.
- Debt protection
Suppose an individual has a home loan of Rs 50 lakhs and a car loan of Rs 10 lakhs. In the event of the tragic death of this person, the responsibility of covering these debts would fall on the family, creating a financial burden. The coverage from the Rs 1 crore insurance policy can be used to pay off these loans. Doing so allows the family toretain ownership of their house and car. This way, their financial independence is secured, and their assets are not liquidated to cover these debts.
- Support during critical illness
Consider a policyholder who gets diagnosed with a serious disease and must undergo a lot of treatment and stay away from work for a long time. With a critical illness rider attached to their Rs 1 crore term insurance, the policyholder might receive a significant portion of the sum insured upon diagnosis. This financial support can cover medical expenses, reducing the burden on savings or the need to borrow money, thereby preserving the family’s financial stability during such challenging times.
- Inflation protection
Reduction in the value of money is the economic factor called inflation, which is the reason why what Rs 1 lakh buys today will probably not be what it can buy 20 or 30 years from now. This is where the significance of Rs 1 crore term insurance and other forms of inflation protection kicks in.
Let’s discuss the case to be understood as an example. Suppose a family’s present spending is Rs 6 lakhs. An inflation of 6% per year would result in a more than two-fold rise in expenses in approximately 20-year periods. In the scenario where the family’s income was cut short by the death of their primary breadwinner, a Rs 1 crore term insurance payout may sound like a hefty sum for covering their living expenses for several years and formeeting other financial goals.
- Tax benefits
An individual paying a premium for Rs 1 crore term insurance can avail of a deduction of up to Rs 1.5 lakh as per Section 80C. This not only decreases their taxable income but also increases the value of the policy by adding a saving aspect to the security that it offers. So, if you have an annual premium of Rs 20,000, then this amount will be fully deducted from the taxable income, resulting in a direct reduction of tax liability.
- Flexible payout options
A policyholder may choose a lump-sum payment of Rs 1 crore cover to settle his immediate needs, like funeral expenses and debt clearances. Also, they can pick up a monthly payout that will give them a steady stream of income needed for family expenses. Some insurers might offer a mix of both, effectively a lump sum to cover immediate needs and monthly payments to ensure long-term financial stability. This flexibility allows the family to plan out their finances better in case the policyholder is no more.
The Rs 1 crore term insurance policy is not only about financial coverage. It rather portrays care and protection for the family’s future. In this era of unpredictability, protecting the financial well-being of your loved ones is a necessity. If you haven’t already availed this essential financial safety net, now might be the right time to consider it. After all, the best time to plant a tree was 20 years ago; the second-best time is now. Similarly, the right time to secure your family’s future with Rs 1 crore term insurance is today.