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Why Entrepreneurs Need Term Insurance Plan? 

Running your own business is a thrilling experience. You get to work in a field you are passionate about and you are free to explore on your own terms and conditions. However, being self-employed means having additional responsibilities and not-so-stable income. As financial consistency is a vital part of life, entrepreneurs should invest in the right financial planning tool for a bright future. Purchasing Term Insurance Plan is the primary step in this direction. A term insurance plan secures the policyholder’s family financially against any unfortunate event or unforeseen demise.

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What is Term Insurance? 

Term insurance is a life insurance policy that provides a protective life cover to the life assured. It is a legally binding agreement between the insurance company and the policyholder. The person investing in a plan agrees to pay a specific amount of premium to the insurer. In exchange, the company promises a protective financial cover over the insured’s life. The cover provided by a term insurance plan is applicable only for a specific ‘term’ i.e., ranging from 10 to 30 years or more, depending on the age at which one invests in a plan. 

Why Do Entrepreneurs Need Term Insurance Plans? 

A term insurance plan is availed to secure your family from unfortunate events. Apart from protecting your loved ones, the term plan also extends its coverage to your businesses. For instance, if you have just started your own business with your partners, then the payout received from the plan can help them in advance to fulfill their dreams, even in case of your absence. 

Money can never replace the person, but it can somehow help you deal with challenging and critical times. Term plan for entrepreneurs will make sure that the financial objectives of your loved ones, as well as your business, are within range even after you. 

Below are the reasons why entrepreneurs need term insurance plans: 

  1. Unsteady Income and No backup plan 

    Unlike a normal 9 -5 job, income from your self-employed business can be highly inconsistent and irregular. Also, if you have just started your business but the returns might not be too good after putting in full effort. In such cases, your death or any ailment can cause severe financial difficulty for your business and your family. Thus, it is important to financially protect your family and your business from such situations. A term plan can help you in securing your family and business as it provides you insurance at low premium rates. 

  2. Lack of Employer Benefits

    The employees who are working in the formal sector receive various employer benefits such as life insurance cover, health insurance, and employee provident fund. Being self-employed, you are required to spend some money to save for your family. Also, you need to invest some amount on a regular basis towards your retirement and other financial objectives, involving marriage and children’s education. Hence, a term plan is important to take care of all your life goals in case you cannot fulfill the investments due to any eventuality.

  3. Tax Benefits

    As an entrepreneur taxpayer, you can utilize the tax savings scheme to decrease your income tax. This plan also offers you with tax benefit u/s 80C of the ITA, 1961. The premium rates of term insurance along with other investments can also decrease your taxable earnings in a fiscal year by up to Rs. 1.5 lacs.  

    Five things to know before buying Term Plan Five things to know before buying Term Plan
  4. Financial Support in case of Terminal Illness and Disability 

    The term insurance plan offers a number of additional benefits which are helpful in different conditions. They provide accidental disability or critical illness cover also. Both these conditions could be devastating for a family majorly when you are an entrepreneur. 

  5. Loans for expanding business 

    Setting up a new business needs instant capital. After the successful delivery of services, the next step is to expand it. Expanding your business means a requirement of more financial resources. Term plans with adequate coverage can help in the loan repayment in case of your absence. 

  6. Protection against business liabilities 

    While running a business, there is a scope for growth for which you require funds be it for expanding business or for working capital. Financial institutions or banks can provide funds to your business, which means more liabilities. In case of your death, such type of business liabilities will slow down the business and also create financial difficulties for your family. In such cases, a term insurance plan can help you lessen this risk, thus protecting the finances of your loved ones. 

  7. Offers hassle-free safety Protection 

    Term insurance plans are one of the purest forms of life insurance plans. They do not have any complexities be it associated with coverage or rate of return. It provides coverage to the policyholder and payout to the nominee in case of the demise of assured during the policy tenure. 

  8. Cost-effective 

    The most unique benefit of term insurance is its low premium rates. It provides a sum assured amount for a reasonable premium rate. This premium charge can further be lowered with an online term insurance plan purchase. 

  9. Provides Support For Financial Dependents 

    If you are the sole earning member of your family, it becomes important to buy a term plan. We all work for providing a comfortable life to our family, but what after your death? Along with the emotional loss of your demise, they also have to face financial difficulties, leaving them stressed and burdened. You can certainly reduce their loss by selecting a term plan that will ensure your loved ones can achieve their goals. 

Wrapping It Up!

Entrepreneurs need to secure both their business as well as personal obligations and a term insurance plan is one of the economical ways to do this. Entrepreneurs need term insurance plan in today’s age to secure their family’s goals. While selecting a term cover for your business, it is important to consider all your outstanding loans/debts and liabilities. If you ignore these liabilities today, then they will have to be looked after by the living beneficiaries, which might become worrying.

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