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SIGNIFICANCE OF TERM INSURANCE FOR INDIAN MIDDLE CLASS
Insurance sector is continuously evolving in India. In recent years, the insurance sector in India has undergone a significant transformation. Within this change, term insurance has emerged as a powerful and essential financial tool for individuals and families across the country. Furthermore, this it is also evident that Indian Middle Class contributes the biggest portion In Indian population. Therefore here in this blog we’ll demystify, “Significance of Term Insurance for Indian Middle Class”.
However, still a huge percentage of people and families are there unaware of the benefits and importance of this essential tool. Everybody is well aware of the Odisha train tragedy, happened this year. As per the NEW INDIAN EXPRESS article dated 11th June 2023, the deadly Odisha train tragedy that claimed 288 lives and left over 920 injured, has brought into light the serious issue that out of the victims of accident only few were insurance covered.
WHAT IS TERM INSURANCE
Term insurance is a form of life insurance that provides coverage for a specified term and offers a lump sum payout in the event of the policyholder’s demise. Due to its features this type of insurance is gaining tremendous popularity in India.
In Indian context, the middle class is like the backbone of the nation’s economy. Comprising a substantial portion of the population, this segment plays a vital role in the country’s growth and development. For the middle class, financial security and stability are paramount, and one of the most crucial tools to achieve this is term insurance.
SIGNIFICANCE OF TERM INSURANCE FOR INDIAN MIDDLE CLASS: BENEFITS
Here, we’ll explore the significance of term insurance for the middle class in India, emphasizing why it’s not just an option but a necessity.
- Financial Protection Within Reach
One of the most crucial reasons to consider term insurance is the financial security it offers to the insured person’s family members. In the unfortunate event of insured person’s demise, family can be left with some important financial responsibilities, daily living expenses, outstanding loans, education costs, and many more. Opting an appropriate Term insurance ensures that family is financially protected and can maintain their quality of life even in insured person absence.
One of the main reasons term insurance holds immense significance for the middle class in India is its affordability. Term insurance provides a high coverage amount (sum assured) at a relatively low premium cost. This makes it accessible to a wide range of individuals, including those with limited financial resources. It ensures that even if one belongs to the middle-income bracket, he/she can afford to protect their family’s financial future.
- Safeguarding Against Unforeseen Events
Life is full of uncertainties, and anyone can face unforeseen challenges or accidents. Term insurance acts as a safety net, ensuring that in case of the policyholder’s untimely demise, their family is not left grappling with financial burdens. This is particularly crucial for the middle class, as it offers peace of mind and security for their loved ones during difficult times.
- Tailored to Individual Needs
Term insurance policies are highly flexible, allowing policyholders to customize their coverage based on their unique financial situation. Middle-class individuals can choose the sum assured and policy duration that aligns with their responsibilities and long-term goals. This flexibility ensures that the policy is designed to fit their specific needs and budget.
- Tax Benefits
In India, it is evident that a major portion of Annual tax collection comes from Middle Class segment. Ironically, Indian middle class have very few options to minimize this tax burden. In this regard, Term insurance provides significant tax benefits, which can be particularly advantageous for middle-class families looking to optimize their tax liabilities. Under Section 80C of the Income Tax Act, the premiums paid towards term insurance are eligible for tax deductions, reducing the overall tax burden. Additionally, the death benefit received by the nominee is tax-free under Section 10(10D), making term insurance a tax-efficient financial tool.
- Protecting the Family’s Future
In a society where the family is at the core of one’s life, term insurance offers a reliable means to protect the family’s financial future. It can help cover immediate expenses, outstanding debts, and long-term financial needs, ensuring that dependents will be taken care of in the absence of the policyholder.
- Addressing the Protection Gap
The middle class in India often faces an insurance protection gap, meaning they are underinsured or lack sufficient coverage to meet their family’s financial needs in case of an unfortunate event. Term insurance is instrumental in bridging this gap, offering an affordable way to secure the financial well-being of their loved ones.
- Peace of Mind and Financial Discipline
Owning a term insurance policy brings peace of mind in middle-class individuals, knowing that they have taken responsible steps to secure their family’s future. Additionally, it encourages financial discipline, as regular premium payments become a part of their budget, promoting savings and financial planning.
- Affordable Premiums
Term insurance policies are known for their affordability, making them accessible to a wide range of individuals. The premium you pay for term insurance is generally lower compared to other types of life insurance, which makes it an excellent choice for those on a budget. In India, where price sensitivity is high, term insurance provides an attractive solution to secure one’s family without a substantial financial burden.
- High Coverage Amounts
Term insurance policies typically offer higher coverage amounts, known as the sum assured, in comparison to other life insurance plans. This means that your family will receive a more substantial payout if something happens to you. This high coverage can help your family meet their long-term financial needs, including major life events like education, marriage, and home ownership.
- Flexibility in Policy Duration
Term insurance policies are versatile when it comes to policy duration. You can choose the term that best aligns with your financial goals. This flexibility allows you to secure your family’s financial future during the years when they need it the most.
Below is an informative video given, to demystify all about Term Insurance and further to increase the ease of understanding:
CONCLUSION
In conclusion, term insurance is not just an option but a necessity for the middle class in India. It is an affordable, accessible, and highly customizable tool that offers financial protection, tax benefits, and peace of mind. In a country where financial security is a top priority for middle-class families, term insurance is an indispensable element of a comprehensive financial plan.
In India, term insurance has gained immense significance as more and more individuals realize its importance in providing financial security to their families. The affordability, high coverage amounts, tax benefits, and flexibility make it a compelling choice for those seeking to protect their loved ones. Term insurance goes beyond being a financial instrument; it’s a promise that your family will be cared for, even when you’re not around. So, if you haven’t already, consider investing in term insurance to ensure your family’s well-being in the years to come. It’s a decision that can make a world of difference.
As the middle class continues to be the driving force of India’s growth story, they should recognize that term insurance is more than just a policy; it’s a proactive step towards securing their family’s future and achieving lasting financial stability. Hope this blog on, “Significance of term Insurance for Indian middle class”, will help to provide the required information.
