Introduction
Congratulations, you have just tied the knot! As you begin this new chapter in your life, you are likely caught up in a whirlwind of romance and happiness. However, amidst the celebration and joy, it’s crucial to focus on more pragmatic aspects of life, like financial planning. Top on that list should be securing a term insurance plan. In this blog, we will delve into why term insurance is a pivotal component in the financial planning checklist for newlyweds and how it can offer peace of mind for years to come.
The Basic Premise of Term Insurance
What is Term Insurance?
Term insurance is a life insurance policy that provides coverage for a specified period. If the policyholder passes away during this time, the beneficiary receives a predetermined lump sum amount, known as the death benefit.
Why It’s Important?
Imagine a situation where the primary earner in the household is no longer around. The financial burden can be immense, often leading to a lifetime of struggles. Term insurance plans can act as a safety net, providing your loved ones with the financial security they need in your absence.
The Perks of Starting Early
Lower Premiums
If you are young and in good health, you are considered a low-risk candidate by insurance companies. This low-risk status plays a pivotal role when calculating your insurance premium. Being younger generally means you are in better health, thereby reducing the “risk” factor associated with insuring you. Because of this, you’re more likely to secure a policy at a lower premium rate.
Now, how do you quantify these savings? This is where a term insurance plan calculator comes into play. A term insurance plan calculator is an online tool that allows you to input various parameters like your age, smoking habits, coverage amount, and policy term to calculate the estimated premium you will need to pay.
Flexibility
Starting early with a term insurance plan offers you the luxury of flexibility. As you age, your life circumstances change, and so do your insurance needs. Most term insurance plans allow you to add riders, which are additional benefits you can attach to your basic plan. These can range from critical illness coverage to accidental death benefits.
The earlier you start, the easier it is to adapt your policy to fit your evolving needs, without the additional burden of increased costs usually associated with age.
Tax Benefits
In India, term insurance plans come with the added advantage of tax benefits under Sections 80C and 10(10D) of the Income Tax Act. You can claim a tax deduction of up to INR 1.5 lakh on the premiums paid. Moreover, the death benefit received by the beneficiary is generally tax-free, making it a more beneficial financial instrument. These tax savings can make a significant difference in your overall financial planning strategy.
Considerations for Couples
Joint Coverage
Being newly married opens up the option for joint-term insurance plans. These plans are designed to cover both spouses under a single policy. Not only does this simplify the administrative process, but it also often provides a discount on the combined premium. This is a win-win situation for couples looking to secure their future together.
Review and Revise
Life doesn’t stand still, especially after marriage. Whether it’s buying a home, having children, or even changing careers, your financial responsibilities will evolve. It’s crucial to review your term insurance coverage at these key milestones and revise it as needed. An outdated policy may not provide adequate coverage, so keep your plan in sync with your current life stage.
Making the Right Choice
Choosing the right term insurance plan isn’t just about going for the lowest premium; it’s about securing comprehensive coverage that aligns with your life goals. Here are some factors to consider:
– Insurer’s Credibility: An insurer’s claim settlement ratio indicates the percentage of claims settled against the total number of claims received. A high ratio is a good indicator of an insurer’s reliability. Always go through customer reviews and testimonials to get a holistic view of the insurer’s credibility.
– Premium: While the cost is undoubtedly a factor, don’t make it the sole deciding criterion. Compare premiums along with the benefits offered by different plans to find a balance that suits your needs and budget.
– Policy Term: Your financial responsibilities aren’t going to disappear overnight. Choose a policy term that aligns with your long-term financial goals, such as your retirement age or when your children are expected to become financially independent.
By taking these factors into account, you can make an informed decision that not only offers peace of mind but also secures your family’s financial future.
Conclusion
Incorporating a term insurance plan into your financial planning checklist as a newlywed is not just a prudent decision but a necessity. It ensures that your spouse is financially secure in your absence and can lead a dignified life without having to compromise on basic needs or future goals. Take the time to discuss this important step with your partner, and choose a plan that best suits both of you.
