What is increasing term insurance plan and its benefits?
Term insurance has been a part of the Indian market for a long time now. Typically, a term plan is a pure protection-based policy, which can offer death benefits to your loved ones in your family. Although it provides death benefits to your loved ones, many of you might not purchase term plans due to inadequate coverage. According to a report, only 5% of people purchase term insurance in India.
Due to minimal sales, a term plan has undergone changes to suit your evolving needs. Today, term plan can offer comprehensive coverage based on your dynamic financial requirements. The new-age features of term plans are specifically designed to ensure your convenience. In addition to this, you can increase your coverage as your life progresses further. Therefore, let’s understand what an increasing term insurance is in detail before you purchase it:
What is term insurance? What is increasing term insurance?
As the name suggests, an increasing term insurance plan is a type of term plan, which can let you increase the sum assured value every year. When you purchase an increasing term insurance, the premium amount might vary. Since the premium amount can depend on health, you should purchase it at a young age when you are fit. Typically, an increasing term insurance can be crafter to keep inflation at bay based on your changing life scenarios.
Typically, an increasing term insurance can be crafted to keep inflation at bay based on your changing life scenarios. Hence, it can consist of features that can be advantageous to you. Let’s go through the following features under an increasing term insurance as mentioned below:
- Coverage
As a policyholder, you can increase the coverage amount every year. Ideally, the rate of increase can be indicated in percentile or an absolute amount. Your insurer would specify the increase rate when you purchase an increasing term insurance. It is always advisable to check with your experts before making a final decision if in doubt.
- Riders
Riders are an additional benefit provided by your insurer to enhance the base policy. Moreover, riders can cover circumstances, which your term policy might fail to cover. Typically, it can offer coverage for scenarios such as critical illness, physical disability, loss of income, and accidental death.
An increasing term insurance can offer many benefits for your long-term security. Since it can aim to provide you with a secure future, your insurance can allow you with benefits that can look after your financial needs. Therefore, let’s go through the top three benefits under an increasing term insurance:
- Affordable
The cost of an increasing term insurance can be as low as of a regular term plan. Under an increasing term insurance, you can increase your coverage at an affordable rate without worrying about creating a hole in your pocket. If you purchase an online term policy and increase your coverage, the cost can be relatively cheaper. You can always check the online market place to get the best rates.
- Tax efficient
Every life insurance product can be eligible to reduce your tax liability, whether it is a regular term plan or an increasing term insurance policy. Under an increasing term insurance, you can claim a tax deduction up to Rs. 1, 50,000 in accordance with Section 80C of the Income Tax Act, 1961.
- Effective
Inflation can be the worst nightmare. Since it keeps increasing at every given time, you should opt for a coverage based on the rapidly growing inflation rate. With increasing term coverage, you can combat the impact of steady inflation.
To sum up, an increasing term insurance can be apt for every young adult who wishes to secure their family and achieve their Life Goals such as getting married in an exotic location, having a bright future for their kids, and so on. When you reach those milestones, you can easily increase the coverage to tackle the changing lifestyle.
