Financial security is one of the most important aspects of one’s life as we want to secure ourselves and our loved ones financially so that they do not fall short on means to fulfil their needs. Various financial tools contribute to securing financial stability, and one effective option is a 1 crore term insurance plan, which provides coverage and financial support of 1 crore. However, many people may still need to decide whether to invest in such a plan. Let’s explore this in more detail.

What is a term insurance plan?

Term insurance is a type of life insurance offered by the insurance companies. As the name suggests, this investment insurance plan is designed to cover life for a set period. If the insured passes away during the policy term, the sum assured is paid to the nominee, and the contract concludes. On the other hand, if the policyholder outlives the policy tenure, then no payment is made to the insured; since the term insurance plan is designed to only cover life and is not designed as a saving instrument, term insurance is a very cost-effective insurance tool. The term insurance plan allows the investor to purchase the policy as per their financial needs allowing them to choose the policy tenure, sum assured, etc. Term insurance benefits are larger than being just a mere insurance tool.

Why purchase a 1 crore term insurance?

1 crore term insurance benefits are many. The policy aims to ensure financial stability for loved ones in case of the insured’s death, helping them maintain financial independence. On the other hand, the insured has peace of mind as they receive insurance coverage for a specified time and in the event of untimely death, they know they have made their loved ones financially secure. The sum assured the beneficiary shall receive will cover the lost income and help them to cover their financial liabilities and future expenses. Determining the right amount is always the tricky part of investing in an insurance product; therefore, there are term insurance calculators that help to understand the premium. However, term insurance has a lower premium amount, and a minimum of 1 crore insurance is the need of the hour, considering the rising cost of living.

Benefits of buying a 1 crore term insurance plan

Here’s how a ₹1 crore term insurance benefits you:

1. High Coverage at Low Premiums

Term insurance provides substantial coverage at an affordable price. With a ₹1 crore life cover, you can ensure financial security for your family at a minimal premium. The premium stays fixed throughout the policy term, eliminating concerns about future increases. While affordability is a significant advantage, it’s crucial to evaluate the right coverage amount to fully protect your family’s needs.

2. Family’s financial independence

By opting for a term insurance plan, you can ensure your family’s financial well-being in case of your untimely death. If you have outstanding loans or debts, the 1 crore payout can be used to settle them, ensuring that your family doesn’t face financial strain and inherits a debt-free legacy.

3. Increased Protection with Add-Ons

You can boost your ₹1 crore term insurance with riders such as critical illness cover or accidental death benefits. These add-ons provide additional protection, ensuring greater financial security for your family in case of unexpected events.

4. Achieving Future Financial Goals

A term insurance payout provides a solid financial cushion that your family can use to meet long-term goals. Whether it’s funding your child’s education or ensuring a comfortable retirement for your spouse, the insurance amount can help them achieve these objectives.

5. Maximising Tax Benefits

Premiums paid for term insurance qualify for tax deductions under Section 80C of the Income Tax Act, allowing you to save on taxes while ensuring your family’s financial security.

Factors to consider while purchasing a 1 crore term insurance plan

Buying a 1 crore term insurance plan needs careful consideration of the following factors.

1. Coverage Amount:
   The coverage amount is the amount that shall be paid to the beneficiary in the event of the death of the insured. Therefore, while deciding the amount ensure to take into consideration existing loans, future expenses, and future lifestyle needs. Opt for an amount that will satisfy the future financial needs of the beneficiary to help them navigate financially without any stress.

2. Policy Tenure:
   Choose the tenure of the term insurance plan in such a manner that it helps cover the important milestones of life like the education of children, housing loans, etc. It’s ideal to opt for policy tenure that covers these important milestones.
   
   
3. Premium Amount:
   Purchasing a term insurance plan means paying the premium amount at regular intervals therefore ensure to purchase the coverage that has a premium amount that fits your budget conveniently. Align your financial planning with financial goals.
   
   
4. Riders:
   It is best to enhance your term insurance with riders that make the insurance coverage robust. Riders with critical illness or accidental death offer additional financial protection as per the terms and conditions of the term insurance plan.
   
   
5. Claim settlement ratio:
   While deciding on the insurance plan be sure to look into the claim settlement ratio of the insurance company. A higher claim settlement ratio ensures that the claims are honoured by the insurance company.

Conclusion

A 1 crore term insurance policy is essential for ensuring your family’s financial security in your permanent absence. It allows your loved ones to continue pursuing their dreams, such as completing their education, getting married, travelling, and being prepared for any emergencies. Providing this financial safety net is one of the most significant ways to show love and care.