Term Life Insurance Blogs

Helping you to make informed decisions about insurance
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Section 80C: How to save tax on life insurance premiums paid
published on December 16, 2022

People begin discussing taxes and investments that can lower their taxable income around this time of the year. It’s vital that you only reduce your tax bill using legal means. That is where Elephant.in can help.

In this post, we’ve covered a one of the most-opted legal ways you can employ to – not only lower your tax bill but also build up a sizable emergency fund – that can protect you and your loved ones in uncertain situations.

One of these legal tax-saving options is Section 80C of the Income Tax Act, which enables you to receive tax benefits on expenses from your income up to a maximum of ₹1,50,000. Let’s take a closer look at this Section.

Life Insurance Tax Benefits in India

One of the most well-known and preferred tax-saving options is Section 80C – because it enables taxpayers to make tax-saving investments like life insurance products to lower their taxable income.

It allows a maximum annual deduction of ₹ 1,50,000 from the total yearly income.

For example, You are a 26-year-old individual, that falls under the highest tax slab rate of 30% having an annual income of less than Rs 50 lakhs. You have opted for the old tax regime.

You have purchased a term life insurance plan from Elephant.in. for an annualized Premium of ₹19,500 for a Premium Payment Term and a Policy Term of 36 years. You get a life cover of ₹ 2 crores. In the case of your unfortunate demise, your nominee will get a lump sum payout of ₹ 2 crores.

As per 30%, the tax on ₹ 19,500 is ₹5,850
+
Education Cess of ₹ 234 at 4% of ₹45,000
=
You save ₹5,616 in a year

In this way, you can save ₹5,616 X 34 years (premium paying term) = ₹ 2,02,176

Additionally, you get the following benefits from a term life insurance plan:

  • Life cover  of over ₹ 2 Crore
  • You save ₹ 2.02 lakhs in tax benefits under Section 80C
  • Get tax-free pay-out under Section 10(10D)

Suggested Read: How much term insurance cover do I need?

It’s almost the end of third quarter of the current financial year and is the right time to start planning your investments for the year and save some of your hard-earned tax money.

You can visit Elephant.in to choose your preferred insurance company, compare various plans and buy the one that best fits your requirements.

Tax Disclaimer: Tax benefits are defined by the Income Tax Act of 1961 and are subject to any future changes. It is suggested that you consult with a tax consultant.

Source: https://incometaxindia.gov.in/

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How much term insurance cover do I need?
published on December 16, 2022

People looking for term life insurance coverage frequently ask us, “How much term life cover do I need? ” The amount of life insurance that each person needs will vary depending on a variety of circumstances. In this post, we will discuss the factors that will influence how much life insurance you need.

3 Important Factors to Consider

Before choosing any life insurance plan, consider the following three most crucial factors to take into account while deciding how much term life cover is required:

  • Does it cover your financial liabilities and loans?

Even if something unfortunate were to happen to you, unpaid debts like your home loan or car loan would still need to be repaid. In addition, you can have further unpaid debts. Make a list of all these liabilities and do the math to determine your total amount owed that must be paid regardless of what.

  • Does it include both primary and secondary education for your kids?

If you are the sole breadwinner for the family, you are responsible for your child’s financial stability. Your child shouldn’t be denied the education s/he needs in the event of your unfortunate demise. Hence, determine a likely cost based on the program and institution you want to register your child in.

For example, A 4-year engineering program, which costs around 5 to 8 lakhs today, by 2025, it would likely cost at least 15–16 lakhs. Further, it is likely to reach 20 lakhs by 2030 and 35 lakhs by 2040. Hence, keep the inflation rate in mind while calculating the cost.

  • Does it cover replace your current income?

Your family’s monthly expenses, such as those for groceries, transportation, medical care, and housekeeping, are also covered by your current salary.

These expenses could change if an unexpected incident occurs or if you retire. Say the monthly expenses for your household are ₹ 45,000 at the moment. Due to rising prices and an improvement in the level of living, this may rise in the future. Hence, decide how much you might need to spend annually to cover the family’s essential costs.

Calculate the Coverage You Require

After you’ve finished, add up all these numbers to get an idea of the total life cover you require. Your term plan’s sum assured must cover the expenses. If it is, you can relax knowing you have enough protection. It is that simple!

The Final Step

Now analyze and compare every term life insurance plan offered on Elephant.in and buy the one that seems most reasonable. Do not forget the premium cost that you will have to pay each month or annually while making this decision.

 

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How your present health/lifestyle affects your Life Insurance Premium
published on April 25, 2022

The benefits and importance of life insurance can never be exaggerated. There is one important aspect that determines your premium. It’s your health and living a healthy lifestyle. Curious about how your current health status affects your insurance premium?

While calculating your insurance premium, several components and factors are considered by an insurer. Apart from the assured sum, health conditions have a significant impact on the cost of the premium you pay.

Without lowering the coverage or benefits of your life insurance there are other smart ways to bring down the cost of your premium. One of the cheapest and most effective methods is taking care of your health. Let’s dive deep into understanding how your life insurance premium is affected by your current health.

  • Preexisting medical conditions: You will have to pay more for your life insurance coverage if you suffer from high blood pressure, obesity, diabetes, cancer, and other medical conditions that your insurer specifies. Never hide facts about your preexisting medical conditions because your claim may be rejected and your family won’t benefit from insurance after your death.
  • Medical History of your Family: Your insurer is also interested in your family’s medical history and not only your personal medical history. This will help them know if you are genetically predisposed to suffer from illnesses such as diabetes, cancer, heart disease, etc. If the answer is yes, then your term insurance premium increases.
  • Drinking Habits: Insurers will consider you to be at risk of serious kidney and liver diseases if you are a heavy drinker. This will increase your premium cost.
  • Smoking Habits: Smoking has a negative impact on every aspect of your life. Smokers are considered high-risk insurance by the insurer because there is a likelihood of claims due to disability, critical illness, or premature death. There is a notable difference between the insurance of smokers and non-smokers. The premium is 40-60% higher for a smoker as compared to non-smokers.

It seems harsh, but insurers have to calculate your life expectancy and risk profile based on your current health for a suitable premium amount of coverage. It would be unfair to those people maintaining good health were having the same sum assured, tenure policy, and are equally charged.

Whatever the type of insurance, buying it early will help save premium costs because health, and age are important factors that determine insurance costs. If you are planning to buy a term insurance plan we recommend you check the Elephant.in Page.

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How Insurance needs change at every stage of life!
published on February 14, 2022

Life Insurance is a type of contract between an insurer and the insurance company, where a company pays a specific sum to the insurer after a fixed term or to the insurer’s family after the death of an insured person. It secures the future of your dependents.

There are various stages of life. When you are young (unmarried), you don’t feel the requirement of life insurance. Even if you take, you go for Term insurance to secure your future. At that point in time, you just think about your parents and you have the least responsibilities. Term insurance with return of premium acts as a financial safety net. As you grow old, you get married. Your responsibilities increase. You need to increase your life insurance with new dependents. The increased amount will help your spouse to make ends meet. After that comes mid-life with your children. To ensure that a mid-life crisis doesn’t come in the way of your monetary plans, you need to get savings insurance that defends your investment and health. There are a lot of savings plans accessible on the market, like investing in ULIP (Unit Linked Insurance Plan) is the best plan to save for the long term.

Many types of Life insurance policies are available: 

  • Term Life Insurance: This insurance plan provides benefit to the family of the insured if the insured person dies during the specified period. If the insured person survives till the end of the term, insurance coverage ceases and cannot be claimed.
  • Term Insurance with Return of Premium: This plan is one of the best insurance plans because it gives maturity benefits. This type of insurance gives a premium back after the policy gets matured.
  • Whole Life Insurance: This insurance plan provides coverage throughout your life up to 100 years. In case of death of the policyholder, the death benefit is given to the beneficiary. Some plans offer to pay a premium for life insurance for 10-15 years only and get benefits for the whole life.
  • Endowment Policy: This policy helps you save money regularly over a period of time. It is a perfect combination of savings and protection. It is payable to the insured if he/she is alive on the policy’s maturity or to the beneficiary with the guaranteed bonus.
  • Unit Linked Insurance Plan (ULIP): ULIP is the best type of insurance policy that gives life cover as well as investment opportunities. It is a long-term investment plan having a lock-in period of five years. The premium that is paid by the insured is used for investment in assets i.e. to purchase units chosen by the policyholder.
  • Moneyback Policy: This policy pays back regularly during the policy tenure. The percentage of the sum assured is given back at regular intervals. The remaining amount is given with a bonus when the policy matures. In case of the death of the insurer, the insurance company gives the entire amount irrespective of the number of instalments paid.
  • Child Insurance Plans: This plan is an investment cum insurance plan to benefit your child’s future needs like education. You can start investing right from the time the child is born.

So, insurance needs to keep on changing with the changing phases of life. 

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Life insurance for people with depression or anxiety
published on January 31, 2022

The first thing to remember is that having depression or anxiety doesn’t have to hold you back from getting life insurance, as most people have a mental illness at some point during their lives. And from the past ten years, the percentage of young adults experiencing mental illness has significantly increased. If you have a complex mental health history, it can be challenging if you have never shopped for life insurance. Under this blog, you can get a clear idea about employee life insurance and make the process more comfortable than ever.

Can you get employee life insurance if you have depression or anxiety?

If you die, life insurance is there to provide a financial cushion for your family or loved ones. Even if you are dealing with mental health challenges, there is a life insurance policy out there for nearly everyone. As insurers want to know how likely you are to die when you apply, your health is one of the main things that insurers consider. You might be wondering if life insurance covers people with depression and other mental illnesses if you have a mental health diagnosis. How severe it is and how it might affect your life expectancy will decide the impact of depression or anxiety on your life insurance.

For instance, it might not have much of an impact if you have a history of mild anxiety and depression that is well-controlled. Your insurance company will ask you health questions, including questions about your mental health when you apply:

  • Are you being treated by a medical health professional or therapist?
  • Which medications or other treatments are you taking?
  • How severe is your condition?
  • When were you diagnosed?

You might also need to take a medical exam and provide details on current and past prescriptions depending on the type of policy, such as employee term life insurance. 

Ideas for getting covered with depression or anxiety:

  • Learn to be honest- If your insurer finds out later that you lied, it can decline to cover you or deny your family a life insurance payout later. Still, it might feel awkward to discuss personal details about your anxiety and depression. Your life insurance company will be better equipped to help you find the right fit if you are honest about your condition.
  • Look around- If you have a history of health issues, then some life insurance carriers might be more lenient than others.
  • Avoid giving up. There are life insurance options available where you are not required to take a medical exam if you don’t qualify for term life insurance or permanent life insurance.

How will mental illness affect employee term life insurance?

It may not impact your rates much if your depression or anxiety is mild and you’re under professional care. It could raise your rates or prevent you from qualifying at all if it is severe and you’ve been hospitalized or are at risk of suicide. Your loved ones receive a cash payment called a death benefit to use for whatever they need if your policy is still active when you die.

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How to reduce your Term Insurance Plan Premium?
published on December 15, 2021

A Term Insurance Plan should be an ideal addition to your financial portfolio. Unmatched financial security is provided by the plan, which is not provided by any other financial tool. You can select a high sum assured to cover the financial loss your family would suffer in case of your premature and untimely death At low premium costs.

Some of the tips to reduce premium rates on term life insurance policies:

  • Buy a plan when you are Young and Healthy:

Your Term Insurance plan premium depends upon your age when you buy the plan. The mortality risk increases as you grow older and determines the premium on your plans. When you delay buying a term insurance plan, the underlying premium rate increases; hence it is recommended that you should buy a plan when you are young.

  • Maintain Good Health and Lifestyle:

Additionally, Health and Lifestyle habits also determine the premiums under term life insurance policy. The premium will be high if you have any medical ailments or physical complications. The would-be increased too if you consume Tobacco the tip. This premium increase is with the underwriting assessment that medical ailments and lifestyle vices increase your mortality risk. Hence, the insurance company charges a higher premium to compensate for the higher inherent risk.

  • Choose a Longer Tenure:

The tenure under insurance features includes long coverage durations, which go as high as 40-50 years. If death occurs during the coverage tenure, the plan pays the benefit. The highest possible coverage duration should be selected as per experts’ advice when buying a term plan. You get for a more extended period, which increases the probability of claim payments for your nominees even after your retirement age and the premium amount outflow is lower. You don’t have to pay a higher premium afterwards for the same Sum Assured, these are the two benefits of choosing a long tenure.

  • Pay premiums Regularly and in an Annual mode:

Premium life insurance plans allow Limited and Regular premiums. When you pay premiums for a limited duration, they are little premiums. On the other hand, regular tips mean paying premiums throughout the tenure of the plan. Your premium rates would be lower compared to limited payments if you choose a recurring premium payment option.

  • Choose the correct Sum assured:

Your premium will be high if you buy a plan which has an unnecessarily high sum assured. Hence, you must be careful when selecting the Sum guarantee and ensure that the chosen coverage amount is neither very high nor too low.

  • Cut down on Frills and go for Basic Vanilla Cover:

Modern term insurance plans feature a lot of value-added features, which enhances the scope of the project. It would be best if you did not go overboard in selecting these value-added benefits. Inbuilt riders are useful additions, but other paid features are to be weighed in terms of the additional premium costs associated with it.

When choosing a premium life insurance, look out for the maximum possible discount to avail of and reduce your premiums by using these benefits.

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How to get Income Tax benefits from your Life Insurance cover
published on November 29, 2021

Financial worries are the most painful ones that each of us undergoes in our daily life cycle. Death is not invited and if there occurs an unpredicted death, it may affect our family badly if our financial state is low.

Life insurance cover is a good goal as it will provide security for the family. A part of our income can be safely handed to the life insurance cover every month or year as per our convenience and can get super befitted. Few insurance policies are very flexible, and they also get differ in the rates and the types of covers that are chosen like term insurance benefits, term or permanent life insurance, or even whole life insurance and premium life insurance.

Life insurance also provides income tax benefits that include free of tax for any death, thus beneficiaries can be free from paying the tax and even no tax for the cash whose value grows time by time. However, 10% of tax is to be paid as income tax if we earn more than the limit that is as per the quote each insurance policy undergoes. Yes, it is more important to know about each insurance policy in the insurance market before buying it. There are chances to buy life insurance policies even with pension funds. For pension fund insurance, there will be tax relief based on the premium. Hence, everyone can get premium life insurance based on the age and premium they pay.

Talking about the age limit, the minimum age to enter term insurance is around 18 years and the maximum age is 69 years (pensioner included). Also, the term will get varied with the basic pay too. Term insurance will suit the people who have loan issues and if the budget is too low. Term insurance tax benefits may vary based on the TDS (tax deduction source). To avail of insurance tax benefits, one must have the annual premium at least 10 times. All the tax benefits are calculated by the income tax rules. Section 80C and 10D are the tax acts that are used in current tax benefits calculations.

Plan to go for 10 times plus for an annual premium and get benefited. If the sum is less than 10 times the annual premium, then 10% of the amount will be deducted. However, the beneficiary gets free on tax payments when the plan holder is no more. Plan holders aged below 45 years can have 10 times the annual premium, and the plan holder of age above 45 years gets seven times the annual premium. Insurance policies are a bit difficult, but if the plan holder chose the right one, then it will be more beneficial for the plan holder and the beneficiary.

Planning for life insurance based on income is the best thing one must have in mind before entering into the insurance policies. Let our family settle well even in the absence of the family head (income source).

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