New policies, reforms, and incentives have been adopted in India’s latest budget to empower people, boost industry, and stabilise the economy. However, what does this signify for those who purchase term insurance plans? Several economic circumstances, including the recently implemented budget, may influence your decision to get term insurance.
Term insurance is essential to financial planning as it cushions families against unforeseen events. Given post-budget economic shifts, knowing how to modify your decisions in this dynamic environment is critical. This guide aims to help you navigate these choices and select the right term insurance plan for your needs in 2024 and beyond.
Understanding the impact of the 2024-25 budget on the Indian insurance sector involves analysing the announcements that may influence premium prices, tax benefits, and the overall financial situation of an individual. This year’s budget includes several initiatives to increase personal savings, promote financial stability, and facilitate access to insurance coverage. Thus, some key things to look for in this budget related to term insurance policies are as follows:
Buying a suitable term life insurance policy will give you the following benefits:
If you are the only earning member of your family, getting a term insurance plan is a smart financial choice. It will ensure that your family is financially protected in your absence. The sum assured can cover daily expenses, clear debts, and pay for emergencies.
You can get a term insurance policy at an affordable rate. Also, the premium rates are considerably low if you are still young and healthy. Apart from low premiums, some term insurance plans allow you to add a return of premium (ROP) rider. This optional add-on benefits you by returning your premiums if you outlive the term. Moreover, a term insurance calculator can estimate your premium for a specific policy.
Some term insurance plans benefit you by adding your spouse to the same policy. This will give a lump sum amount to one partner if there is an untimely death of the other. With this benefit, it is possible to cover household expenses or financial responsibilities without setbacks.
Term insurance plans are straightforward and flexible. This means they can be easily customised based on your needs. For instance, paying a slightly higher premium can enhance your term plan coverage by adding an optional rider, such as critical illness or accidental death.
Here are some other factors which will help you choose the right policy plan:
Claim Settlement Ratio: This ratio represents the percentage of claims the insurance company has successfully settled out of the total claims received. A high claim settlement ratio indicates the insurance company has a good track record of settling claims.
Benefits on Taxes: Section 10D and Section 80C tax deductions (up to ₹1.5 lakh) are attractive aspects of term insurance policies. These deductions were maintained in the most recent budget, making term insurance a great way to reduce taxes and increase financial stability.
Options for Customising the Plan: If your financial needs change, you can easily customise an existing term insurance plan. You can adjust your coverage amount, riders, premium pay model, payout options, and premium payment frequency to meet your changing circumstances.
Post-budget, there are a few key tips to consider about term insurance. One is to increase the coverage amount as the sum you consider enough today may not be enough tomorrow when inflation pushes the costs. Also, you must take advantage of current tax laws by utilising Section 80C deductions, which can help reduce your taxable income.
