You wouldn’t be the first one to come across the advertisements of term plan. The ads where life insurers offer cover for INR 1, 00, 00,000 at some partly monthly premiums. It is only natural that some potential buyers get skeptical thinking it to be a too good to be true scenario. However, in reality, a term plan indeed comes across as a too good to be true plan.
An LIC term plan or any term plan for that matter has just one focus point, offering you the maximum life cover. Since the plans do not have different components such as savings or investments, the entire premium amount is utilized for buying a life cover for you. This ensures high life cover at affordable prices. But does that mean one should blindly buy the policy? Certainly not. Here is a list of all the coverage that the policy offers and then you can take an informative call as to whether or not the plan is for you.
One of the biggest unique selling points of an LIC term plan is their simplicity. You will be able to trace the same in the coverage as well. When a policy holder buys an LIC term plan, they buy it for a certain number of years or term. During that period, should the policy holder lose his/her life, the insurer will pay the sum assured to the nominees of the policy.
It must be noted that, in the fortunate event that a policy holder sees the term through, there are no financial benefits to have had. The reason of death can either be natural or accidental in nature. However, things change a bit when it comes to suicide cases. If a policy holder commits suicide within the first year of buying the policy, the sum assured will not be paid.
What Should You Do Before Buying LIC Term Plan
Before you set out to buy an LIC term plan, there is some ground work that you can initiate from your end. These steps will help you buy a plan that fits into your requirements aptly.
- Family Members
You must consider a lot of factors before zeroing down on a sum assured value. The number of dependents is one such crucial factor. The responsibilities on a single individual is quite different than a married individual. You must choose the cover accordingly.
- Life Style
It is only natural that we plan and hope for the best for our families in the future. Thus, one would want the family members to at least continue with their existing life style. Accordingly, one needs to arrive at monthly expenses and pick up a sum assured that would take good care of the same.
If you have one or more loans against your name, make it a point to add them into the equation as well. For an instance, if you have a car loan, ensure that your sum assured includes the remaining car loan amount as well. The same goes for other liabilities as well.
- Utilize Riders
There are a host of riders that a potential policy buyer can opt along with their LIC term plan. A brief look through them will give you a better idea if you should add any of them or not. For an instance, critical illness cover can be a good add on for your LIC term plan.
The above point will help you arrive at a better sum assured. Depending on your needs, you can also choose the premium paying frequency of the policy.
Benefits of Buying LIC Term Plans
When you do finally buy an LIC term plan, there is a lot more that you get for your money than just a term plan. Here are some of the benefits that you can enjoy.
- An impressive and high life cover for the worst-case scenario.
- The plan offers financial security for your loved ones without burning a hole in your pockets.
- LIC term plan comes along with a free look in period.
- The plans offer lower premium rates for non-smokers.
- LIC term plan has a host of smart riders that you can plug along with your policy.
- You also get a great deal of flexibility when it comes to the frequency, closure of policy, sum assured, term of the plan etc.
- The premiums are tax deductible under Section 80C.
- The proceeds of the fund are nontaxable under Section 10 (10D).
When you opt for an LIC term insurance policy, you are adding a lot of stability related weights to your financial portfolio.