Life insurance can prevent the burden of your loan EMI on your family

Loans have become a common part of everyone’s lives. Just as a house, a car, a trendy mobile phone, and other things have become a necessity, a loan is often used to pay for these necessities. When you avail of a loan you are required to pay it off within a specified duration. You, therefore, plan your budget in such a way that you are able to pay off the loan within the specified duration. But what if you face premature death? Who would pay off the loan then?

In case of the death of the borrower, the loan burden shifts to his family. Thus, in case of your premature demise, your family would have to pay the loan EMI to pay off your debt. Besides suffering a loss of income on your death, your family would face an additional credit burden which might land them in a financial crisis. Can this crisis be handled?

Yes, it can be. You can buy a life insurance policy to take care of your loan burden in case of your sudden demise. Life insurance plans primarily cover the risk of premature death. In case of death of the insured, a death benefit is paid to the family which helps them manage their financial problems. Thus, if you buy a life insurance policy, the financial crisis faced by your family in your absence can be avoided through the death benefit paid by the policy.

When it comes to life insurance, a term plan policy is the best way to cover your liabilities in your absence. A term plan policy is the most basic form of life insurance that covers the risk of premature death. This is a pure protection plan which costs very less and allows you to opt for a high sum assured. When you choose a high term insurance cover, your family gets sufficient financial assistance to meet their financial needs and also pay off any outstanding loan that you have left behind. High term insurance cover, therefore, provides financial security to your family and takes care of your loan EMIs. 

Other benefits of a term insurance plan include the following –

1. Since the premium of the policy is low, you can easily afford to opt for a high term insurance cover. This high cover ensures complete financial protection for your family in your absence. Moreover, the low premiums are also affordable on your pockets making you able to continue the coverage without any strain.
2. Nowadays, a term plan policy offers a wide range of coverage benefits including inbuilt rider benefits. Thus, the plan not only allows coverage against premature death, it also covers other contingencies which you might suffer and provides financial assistance in such contingencies. For instance, if the plan has an inbuilt critical illness rider, a range of illnesses are covered and if you are diagnosed with a covered illness, a lump sum benefit is paid by the policy
3. Term plans also allow coverage for a longer tenure which can go up to 99 or 100 years of age. Thus, you are assured of longer coverage 
4. There are specific mortgage redemption term insurance plans which exclusively cover your liabilities. In case of premature death, the outstanding balance of  the loan is paid off by the plan avoiding the loan burden to fall on your family
5. Term plans also help you in saving tax. The premiums paid for the policy are allowed as a deduction from your taxable income. You can claim a deduction of up to INR 1.5 lakhs under the provisions of Section 80C of the Income Tax Act, 1961. The benefit paid by the plan is also allowed as a tax-free income for your family thereby giving them a higher corpus for their financial needs.

Life insurance policies, especially term plans, are, therefore, an ideal way to cover your outstanding liabilities so that your family gets to live a debt-free life in your absence. So, invest in a suitable life insurance plan, with an optimal coverage level, so that your loan EMIs can be met with the plan’s benefits if you are not around.

How Life Insurance protects your child's education and career goals?

Life is unpredictable and when it throws a challenge your way you might suffer financial troubles. When you have children, you want the best for them. You work hard day in and day out so that your child’s future is financially secured. But what if life puts a stop to your child’s dreams?

While you earn and save for your child, premature death can put a stop to securing your child’s future. Thus, you need a financial plan to secure your child’s education and career goals. This is where a life insurance policy comes in handy. A term insurance plan helps you secure your family’s financial needs when you are not around. When you buy a term life insurance policy online, you can secure your child’s education and career goals too. Let’s understand how –

1. Term plans allow you a high coverage level

Term insurance plans have low premiums. These low premiums allow you to afford a high sum assured level. A high sum assured level helps you meet your family’s financial needs. In your absence the sum assured not only helps your family to meet its financial needs, it also creates a corpus for your child’s future needs. Education costs are expensive and with time they are expected to increase. That is why you need a high sum assured to take care of your child’s education needs. A term plan lets you afford a high sum assured which would help meet your child’s future goals.

2. They are affordable 

As mentioned earlier, term plans have low premiums. Thus, they are easily affordable and help you plan for your child’s future easily. You can pay the premiums of the policy easily and secure your child’s future against unforeseen contingencies.

3. They can be easily bought

Buying a term insurance policy has been made simple with the advent of the internet. Today you can buy a term life insurance policy online from the comfort of your home or office. Moreover, when you buy the term life insurance policy online you can also get attractive premium rates and choose the best plan through comparison.

4. Term plans help in tax saving

If securing your child’s future was not enough, you get the added advantage of tax saving through the policy. Term insurance plans help you reduce your tax liability. The premiums paid for the policy are allowed as a tax free deduction from your taxable income. You can get a maximum deduction of INR lakhs under Section 80C by investing in term plans. Moreover, the benefits which are paid by the policy are also exempted from tax giving your family a tax-free corpus for their needs.

With these benefits, term life insurance policies can prove to be a game-changer in your financial portfolio. However, when you buy a term insurance plan, here are some aspects which you should keep in mind –

• Don’t skimp on the coverage amount. Remember that you are investing in a life insurance policy only to create a secured financial future for your child. Given the rising cost of education, considerable funds would be needed to fund your child’s future which can be ensured if the sum assured is optimal.
• Do not delay buying a term insurance plan. The earlier you buy the earlier can you get the coverage of the policy
• Choose suitable riders with your policy so that you can enjoy a comprehensive scope of coverage under the policy
• Go for the maximum policy tenure. The longer the policy covers you, the longer you can enjoy financial security

While you are investing for your child’s bright future, don’t forget to secure your finances with a term life insurance policy. The coverage offered by the policy along with its tax saving benefits make it an ideal tool of financial security for your child’s dreams. So, buy a term insurance plan and protect your kid’s dreams from being shattered.