Term insurance is one of the simplest forms of life insurance. In case of your sudden demise, the nominee mentioned in the policy will receive a lump sum amount. This amount is known as the death benefit or the sum assured.
You choose this sum assured at the time of policy purchase. Any unfortunate event can happen at any time. Hence, the sum assured you choose has to be enough to fulfill your family’s needs for years to come. However, the amount that you may think will be enough may end up being lesser for your family’s requirement. This may be due to factors like sudden expenses, inflation, etc. To make sure these factors do not affect your family’s future, you can opt for an incremental term insurance plan.
What are Incremental Term Insurance Plans?
An incremental term insurance plan is a type of life coverage that gives you the option to raise your cover amount at every policy term.
For example, if you buy a regular life insurance term plan with a sum assured of ₹ 1 crore, with a tenure of 25 years, you will get ₹ 1 crore, whether you make a claim after 5 years or 15 years. This way, the amount may not be enough for your requirements at the time. In such a situation, an incremental term insurance plan allows you to increase your sum assured by a certain percentage of your current coverage at the end of every policy year. This way, at the time that your family’s requirements are projected to grow, your term insurance policy does too.
The premium for such a plan will be higher compared to a regular term insurance policy by a minimal margin. However, it will not grow along with your sum assured over the years. This means you will continue to pay the same premium for coverage that keeps growing.
Benefits of Incremental Term Insurance Plan
- Affordable
One of the best things about an incremental term insurance plan is that it is extremely affordable. An incremental term insurance plan is only slightly more expensive as compared to a regular term plan. Moreover, while the coverage of the plan grows each year, the premium remains the same.
- Meets growing financial needs
It is common knowledge that with passing time, financial needs grow. When you are young, the term insurance plan may be enough for your needs. However, it may not cover the expenses that may occur later in life. This can include responsibilities like higher education for your children, buying a new house, etc. Even if you die, your family still has these needs that need to be fulfilled. If your needs grow, it only makes sense that your coverage grows too. An incremental term insurance plan increases your sum assured after each year. You can use an online term plan calculator to gauge your ever-changing needs.
- Saves tax
Just like a regular term insurance plan, an incremental term plan offers you tax deductions on buying the plan. As per Section 80C, an incremental term insurance plan qualifies you for a tax deduction of up to ₹ 1.5 lakh.
Now that you are aware of what incremental term insurance plans are, it is time you opt for the plan basis your requirements. After all, when it comes to safeguarding your family’s needs, it is essential to choose the best!
