Reasons Why You Should Not Cancel Your Term Life Insurance Policy
In India, unemployment cases have risen over the past few years, especially during and after COVID-19. This fatal pandemic brought all the global economy to a standstill. India is not any exception. Through the pandemic, several organizations in India laid off their employees, leading to extreme financial difficulties for families.
Furthermore, the associated fee of several items soared as a consequence of inflation. To address unemployment and inflation, families are trimming their expenses to administer inside constrained budgets. On this scenario, many individuals may consider canceling their term life insurance policies to lower your expenses that may be utilized in other ways.
Nevertheless, before taking this huge step, it’s essential to keep in mind that uncertainties can hit at any time with none notice. A term life insurance is the perfect option to care for the financial needs of your loved ones in your absence.
What’s Term Life Insurance?
A term life insurance is an easy life insurance policy that provides death profit in case of the sudden demise of the policyholder during its tenure. Many insurance firms offer reasonably priced term insurance coverage to their customers. You possibly can easily compare those plans and pick the perfect life insurance policy in India to strengthen your financial portfolio.
Reasons to Put money into Life Insurance
- Life insurance offers risk coverage (provides financial protection against various untoward events)
- It encourages you to lower your expenses for future
- Many insurers offer bonuses that progressively enhance your investment. The returns received from insurance coverage help fulfil various goals (children’s education, higher studies, and a secure retirement life)
- It reduces stress
- There are several tax advantages of life insurance policy. As per the Income Tax Act, 1961, you’re eligible for income tax advantages against the premiums of your life insurance coverage
These are among the advantages of life insurance that try to be aware of before withdrawing your policy plan. Now let’s look into why it isn’t a very good idea to withdraw your life insurance plan.
5 Reasons Why you Should Not Abandon Your Life Insurance Policy
In the event you’ve been enthusiastic about what are the advantages of life insurance, then the reply is – unlimited. Life insurance plays a pivotal role in your financial portfolio. Although you’re free to cancel the policy at any time, losing out on financial security could make your life difficult in future.
1. Family’s financial security can be lost
It’s your responsibility to guard the financial needs of your members of the family once you won’t be around. In the event you are the only bread-earner of the family, every member of the family ( parents, spouse, children and siblings) are more likely to depend upon you for meeting their needs. They’re also more likely to face financial turbulence in your absence when you haven’t created a backup plan to guard their future.
The insurance profit that your loved ones will receive after your demise may act as an income substitute. This amount helps within the education of your kids, managing the retirement needs of your spouse, caring for the medical expenditures of your elderly parents, and supporting other household expenses. Nevertheless, when you cancel your policy before the tenure, your loved ones won’t be entitled to receive all these advantages.
2. You should pay extra money to buy recent insurance
Many policyholders often withdraw their life insurance policy, pondering that they’ll buy them in future as per their requirement. Nevertheless, it’s essential to notice here that you simply’d have to pay more to buy recent plans. Insurance premiums are calculated based in your age. To buy a life insurance plan with the identical coverage, you must pay higher amounts in future. In later stages of your life, you may struggle loads to pay these premiums. Furthermore, when you’re diagnosed with a life-threatening illness, the insurer may reject your application or the corporate might offer low coverage.
3. You won’t be eligible for income tax advantages
As per section 80 C of the Income Tax Act of 1961, all insurance premiums are eligible for tax deductions. By paying premiums on your life insurance policy, you’ll be able to avail tax advantages as much as Rs. 1.5 lakh per 12 months. Hence, term insurance coverage are usually not only helpful in protecting the financial security of your loved ones but will even aid you save on tax. In the event you withdraw your insurance coverage, you’ll be able to’t claim these tax deductions.
4. Your loved ones can’t pay your liabilities
In case of your sudden demise, your members of the family can be chargeable for all of your liabilities. Within the absence of any insurance coverage, they might even have to sell some helpful assets to repay your debts/loans. It’s then your core responsibility to guard the funds of your loved ones by purchasing a life insurance plan.
5. It is going to make your life more stressful
Life insurance is a stable backup plan that provides complete peace of mind. A comprehensive life insurance policy will aid you meet all of your long-term financial needs and requirements. It’s possible you’ll also take loans against your life insurance policies and fulfil all short-term goals. Furthermore, life insurance coverage include many add-on riders to strengthen your policy plan. When you cancel the policy, you and your members of the family won’t be entitled to any coverage.
How Do You Manage Your Premiums in Place of Canceling the Policy?
- In the event you find difficulties in managing your yearly premium, then refer to your insurer and alter the mode of payment to monthly or quarterly. It will aid you to administer expenses in difficult times.
- Sometimes your policy plan has riders which might not be appropriate for you. To reduce your premiums, you’ll be able to drop off a few of these riders and select those based in your needs.
In the event you cancel your policy, your loved ones might struggle with financial coverage and protection. Avoid taking any decision in haste and don’t cancel your policy.