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Why Should Term Insurance Plan Be Part of Your Financial Planning in the Year 2025?

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term insurance plan in your financial planning
July 22, 2024

Table of Content

 

Introduction

Financial planning is a habit that everyone must inculcate to ensure financial security. It is the crux of all your future goals and aspirations. While we cannot predict the challenges one might face, we can always prepare a contingency plan. The best way to ensure you are ready for whatever life throws at you is to be financially sound and prepare contingency funds for loved ones is through term insurance plans.

What is Term Insurance?

A term insurance plan is the simplest way to protect your family’s future. It provides death benefits to the nominee or family of the policyholder in case they die during the term of the policy. It allows you to collect a high, assured amount as a life coverage. All you need to do is pay just a few thousand rupees as payment and ensure a safe future for your family.

Term insurance offers policyholders a lower interest rate with higher returns, flexible payouts and payment options. It is beneficial to consider buying your term insurance online as it allows you to compare multiple plans and choose the one that offers higher coverage at a lower cost.

What is Financial Planning?

Financial planning is the process of taking a detailed overview of your financial situation and making specific plans to reach your financial goals. It covers a wide variety of areas, such as taxes, insurance, investment, savings, retirement and more.

A detailed financial plan keeps in mind a variety of goals and responsibilities that need to be fulfilled, like preparing a college fund, charity, retirement planning, etc.

Here are a few important points to keep in mind while creating your financial plan:

Assess your Net Worth

In order to assess your net worth, you would need to add and tally all your possessions. These include financial assets like IRAs, bonds and stocks, ULIPs, and physical assets such as residence and vehicles. Being aware of your net worth will help you to create a realistic plan that is easily achievable.

Create Financial Goals

Your financial goals should include catering to essentials like healthcare expenses, education, retirement planning, estate plans, and emergency funds.

Track your Cash Flow

It is important to track each and every penny that you spend and earn in order to create a realistic plan. It will also help give you a sense of unnecessary expenditures and untracked incomes.

Create Ways to Achieve Your Financial Goals

In order to achieve your financial goals, you may need to make adjustments in your current financial habits, such as monitoring your spending, paying off the credit card debt, and moving funds to savings accounts.

Why Keep a Term Insurance Plan in Your Financial Planning

Including a term insurance plan in your financial planning process offers a number of benefits to the policyholder, such as:

Tax Benefits

As per Section 80C of the Income Tax Act1, premium paid on term insurance is eligible for tax deductions up to INR 1.5 lakh per annum. In addition, the amount received on maturity is not taxable.

Financial Protection

Investing in a term insurance plan provides peace of mind to the policyholder as it ensures that their family and loved ones have a secure future.

Helps in Meeting Financial Duties

A term insurance plan can help your family fulfil financial obligations like paying EMIs, unpaid loans, clearing debts, paying for education, etc.

Acts as an Income Replacement

The cover of a term insurance plan acts as an income replacement for the nominee or family members of the policyholder. With the help of the survivor support received through the term insurance plan, your family remains financially secure.

Multiple Payout Options

Term insurance plans allow you to have the flexibility of choosing between quarterly, yearly, or monthly payouts. This helps you pay the premium as per your convenience and financial plans.

Conclusion

Financial planning is all about designing a plan that helps you reach your destination in the best possible manner. Choosing a term insurance plan helps you secure the financial future of your family and reach your financial destination with ease. It is important to invest in a term insurance plan as soon as possible to ensure maximum benefits at a lower premium. The earlier you start, the sooner you can reach your financial goals.

Related Articles:

ARN: DM/07/24/13122

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Disclaimer

1. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961.

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