Decreasing Term Insurance Plan

In today's times, the market is truly flooded with many options when it comes to life insurance products. Right from an endowment policy, money back plans to a unit-linked insurance plan, sometimes it becomes a tedious task what to choose.

The term insurance also popularly known as a protection plan is one such plan that has negligible risk and is a preferred choice for most of the customers. In this article, we will discuss the decreasing term insurance plan.

When it comes to a decreasing term plan, the cover that is provided within the policy will keep decreasing each year on a predetermined rate. It is to be noted that the premium that is paid by the policyholder will remain the equivalent during the complete policy term.

Why Buy a Decreasing Term Life Insurance Plan?

Well, most of the features of a decreasing term insurance plan are similar to that of a term insurance plan.  Unlike a term insurance plan, the original sum assured that one reduces each year throughout the term of the policy.

The policyholder can decide the duration of the plan. Although the risk of the plan reduces even then the premium of the plan mostly remains unchanged. The premium rates for the plans are also low when compared to any term insurance plan wherein the sum assured of the plan remains equivalent. Upon the maturity of the plan, the sum assured is zero and when the sum assured is paid to the nominee upon the demise within the term plan then the sum assured will be paid applicable for the year.

What are the Advantages of Decreasing Term Insurance Plan?

The decreasing term insurance plans are the most beneficial when you have any liabilities or in the coming times, the expenses will decline, the dependents are likely to become independents and so forth. Listed below are some of the advantages of a decreasing term insurance plan:

• Pocket-friendly

  As we all know, a term insurance plan is pocket-friendly amongst all the insurance products available in the market.  Undoubtedly, substantially it is more affordable than any of the conventional life insurance plan. When it comes to decreasing term insurance plan the premiums remain constant throughout the policy term.

• Flexibility

  When it comes to a term insurance plan the key highlight is that it provides flexibility. Moreover, the plan can be enhanced by choosing certain term rider benefit options. In case of having decreasing term insurance plans, rider options such as accidental disability, terminal illness, etc can be chosen to enhance the plan.

• Prime Coverage

  The insurance cover accessed by anyone is on the premise of the yearly income, liabilities and financial objectives. Now, the variable is subject to change with the age wherein the income increases and the liabilities decrease. For instance, if you opted for a specific sum of coverage at a young age, however, may not need the coverage lately then a decreasing term plan ensures that you the best level of coverage in life. Now, within this, the coverage decreases with the age that means liabilities also decreases. And, when you have a family with independent members then a large insurance cover is not required. So, opting for a decreasing life term insurance plan means that you possess the optimum coverage level.

• Taking Care of the Liabilities

  With improving lifestyles and rise in expenditures it is normal to accumulate the liabilities for achieving life objectives. The liabilities such as a home, education or a car loan most likely are paid off by the retirement period. However, there might be specific liabilities and you surely would not want to let the family suffer due to any of the accumulated liabilities. Therefore, a decreasing term plan ensures that the family is not suffered even in your absence. It ring-fences the family financially from any liabilities when you are not around.

• Tax Benefits

  Investing in the decreasing term plan enables you to save on the income tax. In case of a decreasing term life insurance plan, the premiums are entitled to a tax deduction of Rs 1.5 lakh within Section 80C. The benefits obtained from the term plan are tax-exempted within Section 10(10D). Most importantly, the tax benefits are subject to the provision and are amended regularly.

When is the Right Time to Choose a Decreasing Term Insurance Plan?

The reason to have a decreasing term insurance policy is that the needs of the people in regards to the life insurance might decrease with age wherein the liabilities such as a car loan, a home loan or any other sort of personal loans is either decrease or have been paid off that reduces the fixed expenses. Another imperative advantage of a decrease term insurance policy is that you will need to pay a less premium rate when compared to any other term insurance plans.

The Bottom Line

The primary objective behind investing in any of the life insurance product is to provide financial stability. It is prudent to go for a credible insurance provider with a proven track record so that the family members need not face any difficulties in receiving the benefits of the insurance.