Being financially independent is important for everyone, and single (unmarried, divorced or widowed) individuals are no different. Additionally, having a financial plan that covers your family financially during an unfortunate event is even better. This makes term insurance a vital part of a single individual’s financial plan.
A term life insurance plan is typically considered a product for married individuals with children and dependent responsibilities. However, the advantages of term insurance can be reaped by single individuals too.
Read on to learn more about term insurance and the benefits of term insurance for singles.
What is Term Insurance?
Term insurance is a traditional and simplest life insurance policy wherein the death benefit is paid to the insured’s nominee if any contingency occurs within the policy term. The insured may not receive any survival benefit if he outlives the policy term. The premiums for a term life insurance policy are comparatively lower than other life insurance products.
7 Definite Reasons to Buy Term Plan for Singles
- Ensure the security of your dependents and loved ones
Being single need not necessarily mean having no financial responsibilities toward your loved ones. You may have dependents and the sole earning member of the family.
For some, your parents may be completely dependent on you financially, or you may have to shoulder the responsibilities of your younger siblings, or you may be a single parent; there may be many possibilities.
In such cases, term insurance policies can provide a financial shield to your loved ones and protect them from suffering a financial crisis.
2. High coverage at a lower premium
Age is one of the most crucial factors that determine premium rates. Typically, older individuals attract higher premiums with lesser coverage, and younger people are offered high coverage at low premiums. Thus, it is recommended that single individuals buy term insurance once they start earning a stable income to enjoy lower premiums.
3. Repayment of debt
One of the benefits of term insurance is that it can assist you in repaying your student loan. You may have taken a loan, and repaying it is your responsibility. In case of an unprecedented event, term insurance can ensure that the financial burden of the loan does not fall on your loved ones.
Ensure the term insurance coverage is higher than the loan amount to avoid discrepancies.
4. Bridge the gap between insurance needs and employer-funded insurance
Many organisations offer life insurance policies as a part of their employee benefits program. However, this employer-provided insurance may be insufficient. Moreover, once you leave the job, you are no longer covered under their plan. It is, therefore, advisable to purchase term life insurance to be adequately covered.
5. Marriage and planning for future
Marriage comes with a lot of responsibilities. These responsibilities mean planning and managing your finances well. Planning for your child’s education, buying a house, or other goals require a financial plan with risk management.
In addition, having dependents like your spouse and children requires you to take measures to safeguard their future. A term insurance policy, a pure risk cover, can act as a shield during difficult times.
Additionally, popular term plans like Tata AIA term insurance offer a Life Stage Benefit wherein you can increase your sum assured by a specific percentage at certain important milestones such as marriage, birth/adoption of children, etc.
6. Save to build
Only savings might not be enough to beat inflation. But a habit of saving is surely better than not having one at all. Monthly or periodic term plan premiums will act as savings towards safeguarding your loved ones’ financial future.
Currently, many insurance companies offer the return of premium option under term plans wherein, if the assured survives the maturity period, he gets back the premium paid.
7. Tax benefits
Term life insurance offers tax benefits along with financial security. Premium paid towards the term plan gets a tax deduction for up to ₹1.5 lakhs under Section 80C of the Indian Income Tax Act,1961. Also, the death benefits paid out to the nominee are tax-exempt under Section 10(10D) of the Act
Final Word
Planning your finances early and making better financial decisions always reaps in the long run. Additionally, the earlier you buy term insurance, the more beneficial the results will be. You can take the help of a term insurance calculator to know the premium you need to pay, compare the plans based on these premiums, and make an informed decision.