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20K Salary Term Insurance Plan
Insurance is not just for the wealthy. In fact, term insurance plan that start with low premiums but offer complete financial security to your dependents in case you are no longer around are the ideal way to deal with the uncertainties of life. You can put away a small share from your Rs 20,000 salary every month to secure a safe future for your family.
You may not always be around to take care of your family. And that’s when a term plan ensures your family is well protected.
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Affordable and sensible why you should opt for term insurance plans on a Rs 20,000 salary
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Financial independence when you are fresh out of college and into a job can be a heady feeling. You officially now have a ticket to fulfil all your cherished dreams. But while it’s great to plan for holidays, gadgets and parties, it is wiser to start investing a little for unforeseen events too. Life is unpredictable and even a small start towards insuring yourself against the uncertainties of life is a good idea. A term insurance plan can be a good bet at this stage.
Why is it important to invest salary share in term insurance?
At the start of your career, salaries can be low making savings and investment seem a tough task. But term insurance plans with their low and affordable premium can make things easier. But before that, you need to be aware of why a term insurance plan is required.
A term insurance policy is an investment plan that acts as a life cover for you and provides your family with the death benefit that acts as financial support. Following are the areas, where it can help:
1. Taking care of your family’s monthly financial needs even if you are not around.
2. Repayment of the education loan you had taken, reducing the burden for your family.
3. Creating a lumpsum-saving corpus for your grieving family to take care of their future.
Not just death, some of the term insurance plans can be a super support if you are diagnosed with a critical illness. In case you are diagnosed with cancer or heart disease, these investment plans offer you a lumpsum payout that would help with the treatment.
How much should you invest if you earn 20k per month?
There is no age or income bracket for investing in Term Insurance Plans. Moreover, monthly premiums can start from as low as less than Rs 500, making them a highly affordable option.
Ideally, a life cover should be 10-12 times a person’s annual income to provide sufficient financial security to the family in case the unforeseen happens. Going by the 12 times calculation, with a monthly salary of Rs 20,000, the life cover chosen should be around Rs 2,880,000. Based on this figure, one needs to check premium amounts quoted by various available term insurance plans and pick the one that fits the budget best.
Features and Benefits of a Term Insurance Plan
In a market full of investment options, term life insurance plan stand out with the following features and benefits:
Low premium: Most of these policies only cover premature death and offer no survival benefit. Thus, the premium required is quite low compared to other alternatives.
Long coverage: Term insurance policies can provide coverage for a period as long as 30-35 years, depending on the plan chosen. The idea is to cover the policyholder till old age.
Extensive coverage: Compared to low premiums, the sum assured in term insurance plans is pretty high as they target to provide financial security to family members in terms of the death benefit.
Added advantage: There are certain term insurance plans which offer optional riders to include coverage of accidental death or disability, sudden critical illness or diagnosis of terminal diseases through lumpsum payouts.
Payable Benefits: Term insurance plans only pay death benefits in case of the policyholder’s death within the policy period. No payment is made if he survives the policy term. But there are TROP policies available where premiums paid are returned after the maturity of the policy.
Tax Benefits: Both the premium and life cover in term insurance are exempted from tax under sections 80C and 10 (10D)*.
FAQ:
Q: How much salary is needed for term insurance?
A: There is no income bracket or limit specified for investment in term insurance.
Q: Should term insurance be 10 times annual income?
A: Yes, the life cover in term insurance should be at least 10 times your annual income to be sufficient for future needs and battling inflation.
Q: What is the best age to buy term insurance?
A: Anyone in the age bracket of 18-65 years can buy term insurance. However, 20 years is the perfect time to start your investment plan and secure your family’s future.
Related Articles
- Benefits of Term Insurance
- Features of Term Insurance Plan
- A Comprehensive Guide for Term Insurance Riders
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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.
Written By:
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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Here are a few more articles about Term Insurance.
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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.
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*Tax benefits are subject to conditions under Sections 80C, 10(10D) and other provisions of the Income Tax Act, 1961.
^ Available under Life & Life Plus plan options
##Individual death claim settlement ratio by number of policies as per audited annual statistics for FY 2023-24.
#Provided we have received all the relevant and required documents and no further investigation is required. Claim settlement process would be completed within stipulated timelines once the claim request is approved
ARN - ED/05/23/2239