Why term insurance needs to be a part of your financial plan?
A complete financial plan is one which assists in multiplying your investments and also protecting them, in case of any unforeseen event. While growth can be achieved through various financial instruments, a term insurance plan helps protect your investments. A term plan is more relevant if you are the sole breadwinner of the family.
A term plan protects your family in case of any contingencies and helps them manage significant risks involved on losing the provider of the family. It helps in protecting your ageing parents, securing your children’s education and retaining your spouse’s financial stability. It assists in maintaining their standard of living, in case of your absence.
The best part about term plans is that they act as a ring of protection around your investments. This is because they are extremely affordable and hence, will not affect your existing financial plans and in case of your absence, the claim money will help your family in continuing the same investment plans. A good cover further ensures that your financial liabilities are also taken care of while simultaneously supporting your family’s day to day expenses.
Buying the right term plan at the right time is just as important as the rest of your financial planning. As per experts, an ideal cover should be at least ten times your current salary. The multiplier of ten times takes care of inflation too. Another important aspect is to buy a term plan as early as possible because a term plan chosen early in life can ensure you a larger cover at a smaller premium. With ICICI Pru iProtect Smart term plan, you can get a cover of up to Rs.1 Cr. at just Rs.490 per month*.
Remember to buy a term plan that gives you an option of critical illness benefit, since treatment expenses for a critical illness can drain out your savings completely. ICICI Pru iProtect Smart is a term plan that gives you an option to cover yourself against 34 critical illnesses with an upfront pay-out on diagnosis^. In this plan, you can also cover yourself till the age of 99 years. Additionally, you can save tax up to Rs.54,600 p.a. under Section 80C and 80D^^ and the claim amount is also tax-free.
Overall, a term insurance plan is one instrument you absolutely cannot afford to miss. It is a necessary investment and a crucial part of your entire financial portfolio.
*The above mentioned premium rate is for ICICI Pru iProtect Smart for `1 Crore of life cover for a 25 year old healthy male for a policy term of 21 years with regular income payout option. The annual premium will be `5725 & the monthly premium will be `490. The premium amounts are inclusive of taxes.
^^Tax benefit of ₹54,600 (₹46,800 u/s 80C & ₹7,800 u/s 80D) is calculated at highest tax slab rate of 31.2% (including Cess excluding surcharge) on life insurance premium u/s 80C of ₹1,50,000 and health premium u/s 80D of ₹25,000. Tax benefits under the policy are subject to conditions under Section 80C, 80D, 10(10D) and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses, if any, will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
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