Tag Archive | "Term Insurance"

How Term Life Insurance Plans act as Your Best Tax Saving Tool?

  • Easypolicy
  • 24 Feb 2015

We know the saying “time and tide waits for no man”. These days taxes and bills also do not wait for a man’s approval before being dished out to him. Such is the compulsion to face taxes and bills that we cannot do much when it comes to cutting down bills; however, there are ways to save ourselves from the tax trap through wise decisions to save tax.

The rate of tax on our income may vary depending on our age, level of income and the kind of work we do. Since a big chunk of our annual income is paid as income tax, there are ways in which this taxable income can be reduced. One of the most straightforward ways is in the form of the simple tax saving tool, buy insurance plans.

The General Rules of Tax Saving Tool:

There some simple rules we need to keep in mind before we make an investment. These are:
  • Maximum return minimum investment
  • Matching financial goals to means of investment
  • Save maximum on tax
  • Keep Risk to minimum
  • Procure complete information about investment before making an informed decision

Let us now have a look how insurance plans can save tax as well as serve as a safe and affordable investment option:

Term Life Insurance

In order to secure the family’s future, the breadwinner of the family must purchase a life insurance Policy the earliest that he can. This will help in supporting the family financially in case of death of the breadwinner.

There are various plans that are broadly classified as life insurance products. These include:

  1. Whole Term Life Plan
  2. Endowment Plans
  3. Term Insurance Plans
  4. Money Back Plans
  5. Unit Linked Plans (Ulips)

Regardless of the type of product that you choose, tax benefit is Assured with the purchase of any of these products, since they are all equally eligible for tax benefits under the laws laid down by the Government of India.

The tax deductions are based on the payment of premiums when you buy the insurance policies. The maximum tax deduction offered is Rs 1.5 lakh under section 80C of Income Tax Act (ITA). Also, the death benefit claimed by nominee of the insurance policy holder is exempted from tax under section 10(10D) of ITA.

Consider this piece of trivia: Up to 70% of life insurance policies and products are bought between January and March each year! This is because most people consider that investing in a life insurance policy is the safest, easiest and the most reliable way of securing not just the future, but also income tax benefit.

However, it is advisable that we plan well ahead of the financial year end in order to invest in the right kind of term insurance plans, apart from reaping the obvious tax benefit. Most people postpone tax planning to the very last minute. The flipside is that they could land up playing into the hands of wrong investment options in the last minute just to save tax. If planned ahead, we can invest in Term Insurance plans that help save on tax as well as help us reach our financial goals.

Easypolicy simply makes term insurance comparison easy for you. It's like a search engine that fetches quotes from all insurance companies from desired categories to help you, make price and feature-wise comparisons according to your needs.

Compare Your Best Term Plan Now!

protection for a fixed term with high returns

  • Easypolicy
  • 13 Jul 2012

In the recent times, insurance is looked forward as investment options than their real purpose i.e. protection. However, Term life insurance is still a pure insurance product. It offers no investment benefit rather simple protection for a particular period of time. Therefore, its importance is often overlooked. As a matter of fact, Term Insurance is a low cost alternative to gain a high Coverage for life. It can be very beneficial for those who cannot afford to pay high premiums and yet want to gain adequate life cover. 

What is Fixed Term Insurance?

In fixed term insurance,  the protection is provided for a fixed period of time and at the end of which the cover expires. During this period, a certain amount of Premium is paid for such cover. If the Policy holder dies before the end of the tenure, a lump sum payment is made to the nominees while no amount is paid if the event of death occurs after the expiry of that period. The length of the coverage may vary from 30 to 35 years.

Benefits of fixed term insurance:

When you pay a premium, you get a host of other benefits along with the cover, for a fixed period of time, as your term plan returns. These are:

1.Term insurance can provide higher protection on a small premium.

2.If the policy holder demise during the tenure, the lump sum amount received is free from tax liability.

3.In the event of death, benefits for children’s education can be provided in terms of financial help for higher education.

4.It provides coverage to pay off mortgages and other debts.

5.Term insurances are also available on a yearly basis. 

6.Term plans are highly flexible. These can be renewed, converted to whole life insurance to name a few. However this highly depends on the terms and conditions of the company from which insurance is taken. 

7.Some insurers provide benefits in case the policy holder is getting treatment of severe illnesses like cancer.

When to Buy Term Insurance?

You can buy term insurance at any point of time in your life. However, considering the following points will help you get the most reasonable and beneficial deal.

1.Term life insurance premium calculation is based on the probability of death of a person. Since it gets higher with the growing age, it is advised to buy term insurance at a younger age.

2.It is always better to get a convertible plan. This is because it will help you when you grow financially and would be ready to pay more for a permanent insurance.

3.You never know where life takes you, so better buy an insurance policy online. Also, it is often seen that online deals are cheaper than buying from an agent.
4.Exercise regularly, eat healthy and maintain a healthy lifestyle. Do not get addicted to things like cigarettes, alcohol etc as they will add more to the amount of premium.

Different companies are coming up with very attractive term plans which are better versions of the already existing ones. Use the internet and keep browsing for newer and better options.