4 Questions You Must Ask Yourself Before Buying Term Insurance

(Image Source: Shutterstock)

In life, you do all that you feel is essential to ensure success and happiness. You work hard to earn a livelihood and spend time with your family members to make memories for life. Still, you cannot deny the fact that every new day brings with it a load of uncertainty as well. There is no way to guarantee what the future has in store for you. However, you can stay prepared for the difficulties with the right choices you make in life, one of which is buying a term insurance plan.

Indeed, term insurance is one of the most budget-friendly ways to protect your family and minimize the risk of financial burden they may face in your absence. The growing popularity of term policies is because of their long-term benefits and low premiums.

If you are planning to purchase a term plan for the first time, then the chances are high that you have several doubts and questions in mind. For instance, you might not know about the process of claim settlement or unsure of choosing the right term policy from a specific insurance company. It is crucial not to ignore these questions while buying the best term insurance plan but look for their answers.

Here are four crucial questions you must ask yourself while buying a term policy:

1. Should I Buy A Term Insurance Plan Online or Offline?

Digital advancements happening in the world has made everything simpler and better. The same is valid for buying term insurance. You might have purchased other insurance products through local agents previously. That’s why you think that dealing with an agent in person makes more sense.

However, buying the best term insurance plan online is advantageous for you in several ways. You can look for and buy the plan of your choice as per your convenience. Major life insurance companies in India, like Max Life Insurance, offer a plethora of information to help you compare term policies and make prudent decisions. Since no agents are involved in purchasing term plans online, you pay lower premiums as compared to choosing the same plan with the same benefits offline.

2. Should I Buy a Regular or a Reducing Cover Term Plan?

Whenever you buy a term policy online, you get many variants to choose from. The two most common options are regular or reducing cover. In a regular term policy, the cover or sum assured stays the same through the tenure. Whereas, in a reducing cover term insurance plan, the sum assured reduces after a specific period at a predetermined rate, while the premium stays the same.

A reducing cover term insurance is best for you if you feel your expenses will decline over time, be it paying for the needs of dependents, mortgages, or loans. The premiums for this variant of term insurance is comparatively lower than that of regular option. The choice of a renowned insurer matters here as well. Take the case of the Max Life Smart Term Plan, reducing cover variant. Under this term policy, the sum assured reduces by 5% p.a. after every fifth policy year. As a death benefit, it gives the sum assured as a lump sum to the chosen nominee.

3. Can I Avail Maturity Benefits on Term Plan?

One of the most common questions that people ask about term insurance plans is the maturity or survival benefits. Many people feel bad about knowing that term policy comes with no maturity benefit. All the primary term plans act as a financial safety net for your family members and pay a death benefit in a lump sum mode.

However, some renowned insurance companies in India offer term insurance plan with the benefit of returning premiums. It means that if you survive till the end of the policy tenure, you will get the premium you paid back in the end. It is crucial to understand these terms before buying the policy to avoid confusion later.

4. What are the Tax Benefits of Buying A Term Policy Online?

If your taxable income becomes a cause of worries every year, buying one of the best term insurance plans can lower them up. It is because the premium you pay toward a term policy is eligible for tax deductions under Section 80C of the Income Tax Act 1961. Furthermore, you can get a maximum deduction of up to Rs. 1.5 Lakh in the financial year 2019-20 under this section.

Another thing you must know is that tax benefits shouldn’t be the only reason for buying a term insurance plan. It is crucial to know about other benefits of such policies as well.

Buying a term plan is more like a necessity in life these days. Understanding the answers to the frequently asked questions can help you make a prudent decision. It will also make sure your doubts do not deter you from choosing a term plan at the right time.