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40K Salary Term Insurance Plan

Even if you are saving a good amount from your Rs 40,000 salary, it is never enough in these days of rising inflation. As your lifestyle improve, so do your expenses mount. You have to care for the family you are building as also for elderly parents. A good term insurance plan helps you achieve peace of mind by covering your family should you no longer be around to take care of them.

To delay is to regret

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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Term Insurance

Why term insurance is important even when you earn Rs 40,000 a month

40k Salary Term Insurance Plan
March 05, 2024

Table of Content

 

Reaching the 40K mark in your salary makes you more confident. You can start realising your dreams of getting married, buying a car, even putting down a payment on a new house. With these, come added responsibilities of caring for dependents and paying off loans. Here, a term insurance plan can be a good option if you wish to support your family even if you are not around.  

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

While you look forward to a new phase of your life, investment planning demands a prime focus too. It’s important to understand where you should invest and why. Term insurance plans are designed to act as a financial shield for your family in case you die prematurely and help you prepare well for the unforeseen. These policies make a payout as a death benefit if the insured dies within the policy period. The lumpsum money can help the family cope with the sudden financial troubles and help to run the household smoothly. It can also help them pay for the ongoing loans by the deceased policyholder or keep the entire money aside for future needs. 

How much should you invest if you earn Rs 40,000 per month?

With a salary of Rs 40,000, paying a regular amount for term insurance is easier as its monthly premiums start as low as less than Rs 500. There is no bar in terms of age or income to purchase these plans. Premiums in the case of term life insurance are calculated based on a person’s age, health, medical history, income, financial liabilities etc. 

To decide on the amount to be invested in a term insurance plan, you can go by the experts’ view. According to them, one should get a term life insurance plan that offers cover 10-12 times his annual income. Based on that, a person with a Rs 40,000 salary should opt for a life cover of nearly Rs 58 lakh. There are various term insurance plans in the market offering a sum assured of this amount at different premium rates. You can always pick the one that suits you best. 

Features and Benefits of a Term Insurance Plan

Like any other investment plan, a term insurance policy comes with a set of features and benefits. They are:

1. High sum assured: Term insurance plans only pay death benefit and no survival benefit is offered to the policyholder who lives through the policy term. Hence, the sum assured by the policy is a big amount compared to other alternatives. 

2. Low cost: Term insurance plans are a cheaper bet as the premiums you pay for this policy are relatively much lower than other insurance plans. This is majorly because there’s no survival benefit offered on maturity. 

3. Tax benefit: One can get a tax deduction if they pay for premiums of a term life insurance or gets a death benefit from a policy. This exemption is under sections 80C and 10(10D) of the Income Tax Act. 

4. Longer period: Term insurance plans target providing coverage for an entire life span. Hence the companies usually offer plans for 5-40 years.

5. Optional coverage: Through term insurance, one can get financial support in accidents, and critical or terminal illnesses too. The policies come with additional riders which can be opted for lumpsum payout in these specified cases.

6. Extra advantage: There is term insurance with return of premium policies which pay back all the premiums paid on maturity in case the policyholder survives. One can choose this category if they don’t wish to lose the money invested. 

A Rs 40,000 salary has to be invested wisely to earn the maximum returns and benefits. Term life insurance plan can surely be worth it if you wish to add a financial security layer to your family if something happens to you.

FAQ:

Q: What type of death is not covered in term insurance?

A: If you die in natural disasters like earthquakes, floods or tsunamis, it won’t get covered by term insurance, unless specific riders are chosen. 

Q: Is there any risk in term insurance?

A: Term insurance is the only plan that is covered under pure risk. The policy only pays a death benefit and the policyholder loses all the money invested if he survives through the term.

Q: Who should buy term insurance?

A: Anyone and everyone can buy this policy. If you are marrying late and have children thereafter, term insurance can be a good investment to protect your future.

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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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Disclaimers

*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/05/23/2245