Why Term Insurance is the Best Gift for Your Loved Ones

When you really care for someone, the best you can do is to make sure that their financial future is secured. Even though material possessions bring happiness, coming up with a thoughtful gift, like buying a term insurance plan for your loved ones, is an excellent gesture. Besides that, if you are gifting this, you will also save a lot of money while ensuring that your loved ones have a financial protection blanket for a very long time.

A term insurance policy guarantees that your dependents are financially stable in the event of an unforeseen tragedy. True love is about protection and care, and term insurance is one of the most meaningful ways to express it.

Key Reasons Why Term Insurance is the Best Gift

Here are the most important reasons illustrated why gifting a term insurance policy can be a perfect gift for your loved ones:

Ensuring Financial Security for Your Loved One’s Family and Dependents

In the unfortunate event of your loved one’s death, the ‘sum assured’ provides a financial cushion to cover essential expenses such as household costs, children’s education, and medical needs. This support prevents sudden disruptions in their lifestyle and safeguards their long-term well-being.

Consider a scenario where the sole breadwinner of a family unexpectedly passes away. In the absence of a term insurance policy, the family may struggle to pay for basic necessities. However, a well-planned term policy ensures they have the financial backing to move forward with dignity.

High Coverage at an Affordable Cost

Term insurance is one of the simplest forms of protection. The protection (sum assured) can go up to 1000x of the annual premium, thereby making it one of the most cost-effective insurance options available. As we have seen in the initial example, the plan for Vivaan costs around ₹15000 per year with life coverage of ₹50 lakhs. The protection was up to 60 years (of age), and the premium paying term was only 15 years.

No other form of insurance provides such a huge amount of coverage with such little premium and for a substantial period. Hence, if you gift someone a term insurance policy, it helps you choose a wonderful gift within your budget.

Debt Protection and Estate Planning of Your Loved Ones

Many individuals take loans to fulfill personal and professional goals, such as buying a home, funding a business, or purchasing a car. However, in the event of the policyholder’s untimely demise, these debts can become a heavy burden on their dependents. Term insurance helps cover outstanding liabilities, ensuring that your family does not have to bear financial stress during an already difficult time.

Further, term insurance is an excellent tool for estate planning. Since the liabilities can be paid out of the term insurance proceeds, it is easier to distribute the assets among heirs without creating unnecessary disputes among them.

Peace of Mind & Stress-Free Future

Knowing that your family will be financially secure even in your absence brings immense peace of mind. Unlike material gifts, term insurance provides long-term stability and reassurance. Starting early is always advisable because the premiums are lower and the paying terms are limited.

Tax Benefits

Any premium paid towards the term insurance policy is deductible under Section 80C of the Income Tax Act. Further, any proceeds of a term insurance policy are also exempted under Section 10(10D) of the act.

Summing Up

When you decide to gift your loved one a term insurance policy, it tells a lot of things about you. First, you are a practical and intelligent individual who has seen more ups and downs in life than anyone else. You understand the importance of financial security and have seen or experienced cash crunches. It also implies that you really care about your friends and family and do not want anything to happen with them in any circumstances.

You must, however, choose the best insurer as you are planning for a worst-case scenario and having any claims-related disputes is the last thing you would want to happen with your friends and family. Opting for a reputed insurer ensures a smooth claim process and financial security for your loved ones. Additionally, buying online term insurance (from platforms like Upstox) offers lower premiums and better convenience than offline options. Ultimately, term insurance is the best gift of stability and protection, ensuring your loved one’s family remains secure even in their absence.

FAQs

What is term life insurance?

Term life insurance provides coverage for a specified period, paying a death benefit to beneficiaries if the insured passes away during that term.

How does term life insurance differ from whole life insurance?

Term life insurance offers coverage for a period without accumulating cash value, while whole life insurance provides lifelong coverage with a cash value component.

What are the benefits of term life insurance?

Term life insurance offers high coverage at lower premiums, providing essential protection without straining finances.

Can I convert my term life insurance policy to a permanent one?

Depending on the insurance company, it may be possible to convert term life into whole life insurance.