Working as a tech professional in a large corporation has its own set of advantages. Your employer may offer you attractive incentives, attractive pay, ESOPs, and insurance coverage. Usually, companies purchase group insurance plans for their employees, which may not be enough in case of death or disability.
Hence, it is ideal for you to opt for a term life insurance plan to protect you and your family in case of an unfortunate event. This article will give you a detailed guide about term life insurance for tech professionals.
What is Term Insurance for Tech Professionals?
Term insurance is a type of life insurance you can buy to offer financial protection to your family. It is the simplest form of life insurance, where you pay premiums for a specified timeframe so your family/nominees can receive benefits after your death.
As a tech professional, you can buy a term insurance policy from different insurance companies or banks for a specified tenure, such as 10 years, 20 years, 30 years, or more, according to your preference.
How Does Term Life Insurance for Tech Professionals Work?
When you purchase term life insurance, the insurer will offer you comprehensive life coverage at affordable premium rates. In case of your sudden death during the policy tenure, the insurance company will offer death benefits to your family. They can file a claim to the insurance company to receive the sum assured in your absence. Remember that with regular term insurance, there are no maturity or survival benefits if you outlive the policy period unless you opt for a Term Return of Premium (TROP) policy.
Why Tech Professionals Need Term Insurance?
Here are a few reasons why you must buy a term life insurance plan as a tech professional in India:
Financial Protection
The most important benefit of a term insurance plan is that it gives your family the needed financial cover when you are no longer with them. Your family will be paid a sum to cover expenses like education fees, loan instalments, daily expenses, etc. This ensures your loved ones are financially stable.
Comprehensive Coverage
Unlike employer life insurance plans, individual term insurance plans offer comprehensive coverage for your family in case of your sudden demise. Compared to other forms of life insurance, this insurance plan does not entail any investment, hence the prospect of paying a considerably lower premium.
Customisable Option
Another big plus of a term life insurance plan is that it can easily adapt to your insurance needs. Term insurance is readily available, and riders can be attached. These include accidental, critical illness, permanent disability, and others. Many insurance providers extend these additional covers to enhance coverage.
Tax Benefits
The important advantage of buying a term insurance plan proposed for a tech employee in India is tax deductions under Section 80C and Section 80D of the Income Tax Act 1961. According to the IT Act Section 80C, taxpayers are allowed deductions of up to Rs 1 50 000 in a year on the premiums paid. Also, the amount spent on premiums for term insurance riders, such as critical illness coverage, can also be tax deductible up to Rs 25,000 under Section 80D of the Income Tax Act, 1961.
Peace of mind
Since life is random, people are unable to predict or prevent occurrences that are considered random. Therefore, you can manage the financial losses of such incidents and enable your family to be protected in your absence. By securing term insurance, you live your life knowing that your family and dependents are financially secured just in case the worst occurs you within the policy’s period.
Term Life Insurance: Additional Riders
For tech professionals with unique lifestyle and career considerations, adding the right term plan riders is important to meet their unique requirements. Let’s look at some of the most popular and relevant riders.
Accidental Death Benefit Rider: This rider helps supplement your family’s income in the event of your death due to an accident.
Waiver of Premium Rider: If you become disabled and cannot work, this rider will help keep your policy active without requiring premium payments.
Return of Premium Rider: If you outlive the policy term, this rider refunds all the premiums paid on your term life insurance plan. This simply means that your net cost is brought down to zero.
Critical Illness Rider: This rider is useful if you are a tech who works in stressful areas that may predispose you to sickness. It provides a lump sum payment if diagnosed with any of the covered critical illnesses.
Disability Income Rider: This rider assists in the payment for income loss due to a disability, easing financial pressure.
Remember that every rider is advantageous. However, you must choose strictly according to your needs, which will help you avoid unnecessary payments.
Determinants of Term Life Insurance Premiums
IT professions are generally considered less risky than other high-risk jobs like flight crews, construction operatives, firefighters, etc. Nonetheless, the following aspects determine the rates of their term life insurance:
- The premium charged will be much lower depending on the age of the tech professional; the younger, the better. It is as simple as you are at lower risk than older IT professionals.
- As with any type of insurance, the premium depends on the coverage amount agreed upon.
- Specific lifestyles, in particular smoking and excessive drinking, also influence the premiums.
- The family’s medical history also influences premiums. A history of serious illnesses could also contribute to higher premium amounts.
Final Words
As a tech professional in India, if you want to secure your family’s financial stability, you can consider buying a term insurance plan with the right coverage amount based on your family’s needs. Term plans also come with options to add riders for enhanced coverage; this means you can customise your plan by adding the right riders. Apart from protecting your family financially, you can also get tax benefits under Section 80C and Section 80D of the Income Tax Act 1961.
