25K Salary Term Insurance Plan

 

  With the first appraisal at work, comes the first urge to invest. A Rs 25,000 pay packet ensures that you can afford to salt away a bit of your salary towards savings and investing for the future in a methodical way. It also means you can now think of ensuring that your family does not suffer financially if you are no longer around to care for them. A term insurance plan can hence be a good choice to start building a secure future for you and your family.   

Why is it important to invest salary share in term insurance?

Every rupee earned needs to be carefully allotted towards regular expenses, savings and for indulging in luxuries. Your responsibilities towards your loved ones also need attention. Here a term insurance policy can help you balance both smoothly. To understand how it works, take note of the things that can be addressed by a term insurance plan. 

The target of a term insurance plan is to offer financial security if the policyholder dies within the policy term. A sum assured is provided to the bereaved family in a pre-specified amount, that can shield them from monetary troubles. This lumpsum amount can thus be used to fund short-term or long-term financial requirements of the family. Alternatively, this death benefit can be used to repay the educational loan if any, taken by the policyholder, thereby saving the family from an extra burden. 

How much should you invest if you earn 25k per month?

According to experts, one should have a life cover amount which is 10-12 times his annual income. Thus, a Rs 25,000 salary calls for Rs 36 lakh as your sum assured. Various companies offer different term insurance plans with varying premium rates for this life cover. You need to choose the best one according to your need and convenience. 

Premiums are calculated based on a person’s age, income, policy tenure, medical condition and other factors. With monthly premiums starting as low as less than Rs 500, term insurance policies can be a good investment option if you have a Rs 25,000 salary. The plus side of this plan is that there are no eligibility criteria in terms of age or income. 

Features and Benefits of a Term Insurance Plan

Term insurance plans have a defined set of features and benefits that makes them a worthy choice. 

1. Affordability: With premium requirements at quite a low rate, term insurances are usually affordable for investment at the early stages of your career. 
2. Death Benefit: Term insurance is meant for covering premature deaths only and no survival benefit is offered. However, the sum assured is pretty high compared to the low premium rates. 
3. Coverage period: Targeted towards young investors, term insurance plans are designed for 30-35 years to provide them with extensive life coverage. 
4. Riders: There’s a scope to get covered for accidents as well as critical and terminal illnesses. Some term insurance plans provide this opportunity through optional riders.
5. Tax exemption: Premiums and death benefits of term insurance policies are entitled to tax exemption under sections 80C and 10(10D)*. Thus, it’s a hassle-free investment.
6. Return of premiums: General term insurance plans don’t pay anything if the policyholder survives the policy tenure. However, Term Insurance with Return of Premium plans pays back all the premiums paid after the policy matures. 

FAQs:

Q: How long should we pay for term insurance?

A: Ideally, one should opt for a policy based on his retirement age. Term insurance companies mostly offer a policy term of 5-40 years.

Q: Can I get a 5-year term policy?

A: Yes, it’s one of the shortest tenures for term insurance plans. But the premiums won’t be cheaper here.

Q: Is it worth buying term insurance?

A: Yes, it is because it would help your family cope with the financial struggles in case the unforeseen happens and you are not around to take care of them.

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