HomePersonal FinanceLife InsuranceStrategic Financial Planning: Incorporating 1 crore term insurance

Strategic Financial Planning: Incorporating 1 crore term insurance

For a secure and prosperous future, strategic financial planning is a must. In our country, where speculation and financial aspects are constantly changing, understanding the need for strategic planning is imperative. It is more than setting aside funds; it is tied in with endowing a security net to your near and dear ones, assuring their prosperity when you are no more there. Here’s why consolidating a one crore term insurance plan to your financial plan is essential.

Term Insurance Policy

Integrating one crore term insurance into financial planning

Adding a 1 crore term insurance policy to your financial strategy is not only an instrument but also a need, particularly in our country where our family is considered a cornerstone of one’s life. Read on to understand the reasons behind – 

  • Debt protection

Debt might be a considerable burden for your family, particularly in the non-presence of the fundamental income. A 1 crore term policy covers outstanding commitments such as personal loans, home loans or car loans. It safeguards your family member from the monetary burden and ensures your assets are not forfeited due to your inability to make EMI repayment. 

  • Financial security

A one crore policy offers a financial safety net for the members of your family. In the occasion of the holder’s demise owing to unforeseen scenarios, the sum assured might be adequate to pay the family’s expenditures. It can cover your child’s higher education and daily household expenditures while maintaining a good life standard without compromise. The insurance cover ensures your dependents’ futures are safeguarded even if you are not there anymore. 

  • Affordable premiums

Besides the large sums insured, the benefits of a 1 crore term insurance policy are modest, especially if you begin at a young age. The insurer’s risk decreases when the policyholder is young and healthy. Locking in a low premium early in life may allow you to receive enough coverage without breaking your wallet.

  • Mental peace

Knowing that your near and dear ones will be financially comfortable during your absence offers tremendous mental peace. It enables you to live a life without any frets about your family members’ future financial stability. This peace of mind is a big benefit of having a term policy cover. 

  • Inflation hedge

With the increasing living cost, a huge cover of 1 crore assists in safeguarding the value of the insured fund from inflation. It ensures your dependents’ financial future is secure, with adequate funds to live well in upcoming years.

  • Tax advantages

Making an investment of Rs one crore term insurance covers tax benefits. The premiums paid for the insurance are tax deductible as per Section 80 C and the death benefits availed by the nominees are free of tax as per Section 10 (10D). This makes the term insurance more than a financial protection instrument; it even serves as an excellent tax-saving tool. 

Features to consider when purchasing one crore term insurance.

  • Terms for payment of premium

You can make payment of your premium in a single sum, for a specific length of time or across the course of your policy. Your selection might be impacted by your financial circumstances and income. 

  • Sum assured

Make sure that the sum assured meets your family’s future monetary needs. Factor in their existing lifestyle, future goals, debts, and inflation level. 

  • Claim settlement ratio

This ratio shows the claim percentage settled by the insurer. A higher ratio suggests a better chance of your claim being settled with zero issues, demonstrating the insurer’s good reputation. 

  • Policy term

Select the term insurance policy’s duration that offers cover until an age at which you anticipate your obligations or dependents’ needs would be considerably higher. It is crucial to make sure you are financially secure across your most vulnerable times. 

  • Riders/add-ons

Riders are additional benefits that can be included in a basic insurance policy to offer complete coverage. Such riders might involve critical illness coverage, accidental death benefits, a disability rider, and others. They endow additional security, however at a higher cost. 

  • Flexibility in expanding coverage

Some insurance plans allow you to enhance the amount covered at a specific life event such as childbirth or marriage. This instrument allows your cover amount to grow by your enhancing obligation needs. 

  • Solvency ratio

This ratio evaluates the insurance company’s financial stability as well as its ability to meet long-term obligations. A higher solvency ratio shows financially healthy management, which is essential to ensuring your claim is paid. 

  • Premium waiver benefit

This rider waives future payment if the holder of the policy becomes incompetent or ill, ensuring that the policy is still in existence and lessening the family member’s financial burden. 

  • Tax advantages

Note that the tax advantages of term policies are covered under Sections 80 C and 10 (10D). This can help with smart tax planning.

  • Policy revival period

In the case you fail to pay the insurance premium, your cover might lapse. However, insurers might provide you a grace period during which you can revive your insurance policy. Being aware of your revival terms is essential to avoiding insurance policy lapses. 

  • Payout options

Insurers generally offer many payout options such as monthly income, lump sum, or combination. Select the one that best matches your family member’s needs. 

  • Customer service and support

A good customer care system is required to provide hassle-free service. Check to see if the insurance company has a good track record for customer service and claims payout.

  • Exclusions

Be aware of policy exclusions to minimise surprises during a claim. Common exclusions include suicide within the first year, death as a result of engaging in harmful activities, and so on.

  • Underwriting process

Know how the insurer evaluates your application for an insurance policy, involving the required healthcare tests and the time range for issuing the policy. This assists in drafting well-informed expectations. 

Final thoughts

Adding a 1 crore term insurance policy to your plan is more than just securing considerable funds for the future of your family, it is even about ensuring that their objectives, dreams, and daily needs are met well in your absence. It expresses affection, responsibility, and foresight. As a consequence, while life is unpredictable, having a great term insurance plan ensures that your family’s financial future is covered regardless of what occurs. Make the correct decision now for a peaceful and happy tomorrow. 

Moneyexcel Editor
Moneyexcel Editor
Hi, I am Raviraj working as an Editor in Moneyexcel. I have more than 5 Years of Experience in the blogging and content creation.