Term Insurance For Individuals With A 35K Salary

We all love the idea of being financially independent, don’t we? From a very young age, we are always taught to save money and grow money by making wise financial choices. Whether it is investing in stocks, buying mutual funds or saving diligently for our future, making smart financial decisions early in our careers can build the foundation for a sound and wealthy future.

Take, for example, Rahul, a Junior Equity Research Professional who landed his first job at a sell-side firm. Every morning, he and his constant companion- Royal Enfield, commute through the bustling streets of Pune. On his way to the office, he stops by a local Tea and Poha vendor for some quick and affordable breakfast options. As much as he is excited about his new job, he dreams of buying a well-furnished apartment and travelling the whole world, and most importantly, he wants to ensure a comfortable life for his parents in the later years.

Like many of us, Rahul, who is so high on dreams and ambition, fills his weekdays with office chores and weekends with researching investments, chatting with his buddies about mutual funds and reading up on stock market trends. Amidst all this, he suddenly comes across the idea of term insurance. At first, he was overwhelmed by the thought of whether his salary would be enough to cover his expenses! After all, he has rent to pay, groceries to buy, and the occasional party night out with friends. But by delving deeper into this topic, Rahul realises that term insurance is both affordable and also essential for protecting his loved ones.

But is term insurance for individuals with a 35k salary really feasible?

No worries. Today, we are going to address exactly that.

In this article, we will understand why term insurance for individuals with a 35k salary is a wise choice and can offer mental and financial peace.

Why is Term Insurance for 35K Salaried Individuals Needed?

Individuals like Rahul, earning a Rs. 35,000 salary, often have limited savings and investments. Despite his best efforts to save and invest wisely, Rahul frequently worries about what would happen to his family if something were to happen to him. And exactly this is where term insurance comes into play! It not only provides a safety net but also offers a substantial payout to our loved ones, ensuring their financial security. It acts as their income replacement and helps secure our family’s future without compromising on their dreams and lifestyle.

Like many individuals with a Rs. 35,000 salary, Rahul might have multiple loans on his shoulders, such as home, personal, or education loans. Say you were in his shoes- Would you want these liabilities to fall upon your family if something happened to you? No, right! This is where individuals with term insurance can cover these loans, preventing the burden from falling on their loved ones.

The next advantage of having a term insurance policy is the affordability of it. The premiums are very low and worth it for you. For example, a Rs. 1 crore term insurance cover costs as low as Rs. 900 per month. This means for every rupee Rahul invests, his family will get Rs. 1000 back if he, unfortunately, passes away while the policy is still active.

And Eureka!!!! Rahul realises that with his Rs. 35,000 salary, he can opt for a policy with a lower premium, making it easier to manage his budget. This also makes sure that even with his moderate income, he can provide adequate financial protection for his family. Knowing that your family’s financial future is secure surely brings you peace of mind, right? Now, you can focus on your present and future goals without constantly worrying about unforeseen events.

Let’s now move on to understanding the benefits of term insurance for individuals with an income of Rs. 35,000.

What Are The Benefits Of Term Insurance For Individuals Earning 35K?

We hope you, like Rahul, are now convinced to invest in term insurance. But let’s break down the benefits once again in detail for you and see how it can be helpful for individuals like you who earn a 35K salary-

1. High Sum Assured At Low Premiums: Just like an umbrella will keep you dry during heavy rain, term insurance will protect you against uncertainties by offering a high sum assured without causing a deep dip in your pockets. It will offer you relatively low premiums. This makes it affordable even for individuals with a Rs. 35,000 salary. This promises you strong financial protection without straining your monthly budget.

2. Flexibility And Customisation: Who doesn’t love the idea of customisation? Individuals with term insurance policies have the flexibility in terms of choosing policy tenure, sum assured and more. You can choose a policy that aligns with your financial goals and needs. This customisation ensures you get the most suitable coverage without any hassle.

3. Simplicity Of The Policy: We have repeatedly been telling you that term insurance when compared to any other life insurance, is the simplest one. It purely focuses on providing you with a life cover without the complexities of investment components. It is just like learning a bike with training wheels.

So, be it Rahul or you, who is just starting to understand the term insurance, due to its simplistic structure, the call to make a buy can be really easy.

4. Optional Riders: You can think of term insurance riders like adding extra features to your favourite smartphone. Just like how you might add extra storage and a stronger case to protect your phone, insurance riders help you enhance your policy’s coverage. These optional add-ons, such as critical illness cover, accidental death benefit, and waiver of premium, bear you with extra protection against various risks.

Take the example of Rahul, a policyholder, with his wife and his kids as nominees. From his college days, Rahul has been a travel maniac. Hence, he topped up his policy with an accidental disability rider. God forbid, if Rahul ever faces an accident leading to a partial or permanent disability during his travels, this rider can prove to be his armour.

Now you might wonder, how this can help his family? Well, the rider provides an additional sum of money to assist in covering for any expenses that come along with the illness.

5. Claim Assurance: This is like a warranty card for your insurance! As per Section 45 of the Indian Insurance Act 1938, if your term insurance plan has been active for 3 consecutive years, the insurer can’t reject a death claim on grounds of fraud, misstatement or suppression of facts. This means your family is guaranteed^# to receive the claim money if the policy completes 3 years, as long as you pay the premiums on time.

6. Global Coverage: Another benefit of having term insurance is that it covers death globally, with the single exception of suicide in the first year of purchasing the policy. It is a global protection net for your near ones. Imagine you have a magical passport that ensures your family is protected no matter where you travel or live.

Whether you are hiking in the Himalayas, working in a bustling city abroad, or enjoying a tropical vacation, your term insurance policy has got your back. Your policy would protect your family no matter where you are in the world.

Isn’t it a comforting thought knowing that your loved ones are safeguarded around the world?

7. Tax Benefits*: We all love awesome discounts on our favourite brands, right? You get to save money while still getting what you need. Similarly, term insurance offers you ways to save on your taxes while helping you protect your family’s financial conditions.

Individuals with term insurance in India can enjoy tax benefits* in 2 ways. One on the premiums you pay and the second on the claims your family receives. As per Section 80C of the Income Tax Act,1961, you can get tax deductions up to Rs. 1,50,000 for the premiums you pay each year. Plus, if you pass away during the policy term, the claim your family receives will be exempted under Section 10 (10D)**.

So, for the young, adult and older generations, these tax benefits* make term insurance an even more attractive option, helping you save money while securing your family’s future. Too cool, right?

What Are The Factors To Consider When Choosing Term Insurance For 35K Salary?

Now that we have talked about the benefits of term insurance let’s look at some important things to think about before you buy a policy. Just like Rahul, who’s figuring his way out of his financial plans, you too can make sure you choose the right term insurance by keeping these points in mind.

1. Buy Only If You Need It

Before you decide to buy a term insurance policy, it is important to understand why you are buying it. The main reason for getting term insurance is to make sure your near ones are financially safe or to protect them from any big loans or debts you might have. So, ask yourself- “Do I have any dependents or expect to have them in the future, or do I have any loans or debts?” If the answer to these questions is “NO”, then you might not need a term insurance policy. But if the answer is “YES”, then it is a good idea to invest in a term insurance policy as soon as possible.

Let’s think that our guy Rahul has gotten married and wants to start a family soon. Rahul and his wife just bought a new house with a home loan. He realises that if something happened to him, his wife might struggle to pay off the loan and manage other expenses. By getting a term insurance policy, Rahul can make sure his wife won’t face financial problems if he’s not around. Thus, the insurance money would help pay off the home loan and provide support for his wife and future kids.

2. Choose The Right Sum Assured

Next, If you are sure you need to buy term insurance for your family’s financial security, it’s important to choose the right sum assured. Why so? So that your family doesn’t end up with inadequate coverage in your absence.

Here’s a simple way to calculate your right cover amount:

• Living Expenses Fund: Add up your basic needs like groceries, monthly bills, etc.
• Major Expenses Fund: Add in the costs like your children’s education, weddings, etc.
• Major Liabilities Fund: Add up any loans or debts you have.
• Existing Funds: Subtract your savings, fixed deposits and other assets, and multiply them by their respective risk factors.

To ensure your family's financial security in the future, consider accounting for inflation when calculating your insurance needs. For example, if your current life insurance covers Rs. 1 crore and you calculate you need Rs. 2 crore for future needs considering inflation, you should get additional term insurance for the Rs. 1 crore shortfall. This way, you can be sure your family is fully protected against financial uncertainties.

3. Choose The Right Policy Duration

When you are deciding on the duration of your term insurance policy, consider your current income, savings and future expenses. Always estimate the age by which you expect to have fulfilled all your financial obligations and have saved enough money to cover the rest of your life. This is typically your retirement age. You would need to buy a term insurance plan that covers you until this age, possibly with an extra buffer of 5 years for added security. This way, you can make sure your financial protection aligns with your long-term plans.

4. Premium Payment Term

Imagine paying off a mortgage early to own your home sooner. Similarly, if you want to stop paying premiums before the end of your policy’s duration, you can opt for a limited pay option. This lets you finish paying premiums in a shorter time compared to the full policy duration you choose. For example, with a 5 pay option, you complete payments in 5 years; with a 10 pay option, it’s 10 years, and so on. After completing these payments, you will still enjoy the insurance coverage for the rest of the policy duration. Therefore, it gives you the flexibility in managing your insurance payments according to your financial plans.

5. Premium Payment Frequency

When you buy term insurance, you not only choose the length of time you will be paying premiums, but you can also decide how often you want to make those payments.

You are given 4 options:

• Yearly: You pay once every year
• Half-yearly: you pay twice a year
• Quarterly: You pay four times a year
• Monthly: you pay every month.

Choosing this payment frequency depends on what works best for your budget and financial planning. For example, if you have a steady monthly income, you might find it easier to manage smaller monthly payments. On the other hand, if you receive large sums of money periodically, like a yearly bonus, you might prefer to pay yearly or half-yearly.

No matter what option you choose, it is crucial for you to pay your premiums on time. One of the best ways to do this is by setting auto-debit with your bank. This means the money will be automatically debited from your bank account and sent to the insurance company on the due date. By doing this, you will easily avoid missing a payment and also risking your policy from lapsing.

It’s just a simple step that can bring peace of mind.

6. Increasing Cover

As we grow older, our financial responsibilities also keep increasing. You might get married, have kids, buy a house, or need to pay for your children’s education. To meet all these growing duties and responsibilities we need to ensure our family is always well protected. Hence, it is important to upgrade your policy from time to time.

One of the best ways to do this is by using the increasing cover feature. When you choose this option, the sum assured gradually increases at specific intervals until it reaches a maximum limit. This means your coverage grows with the rising inflation and financial goals.

For instance, let’s say you start with a term insurance cover of Rs. 10 lakhs; with the increasing cover feature, this amount goes up by 5% every year until it reaches Rs. 20 lakhs. So, after the first year, your cover would increase to Rs. 10.5 lakhs. Then Rs. 11 lakhs the next year, and so on, until it hits the maximum limit. This way, as your needs grow, your cover grows, too! This feature saves you from the hassle of buying new policies or increasing your cover manually.

7. Married Women’s Property Act

We all know about the fact that if you have taken out loans and passed away before repaying them, the money from your term insurance policy will be used to pay off these debts. But here’s a twist- only after all your loans and debts are settled will your nominee receive the remaining account.

To avoid this, if you are married and male, you can purchase your term insurance plan under the Married Women’s Property Act (MWP).

Now, what is this? The MWP Act is a welfare act that gives married women specific rights and protections. You need to sign an extra addendum for this.

By using this, you ensure that the claim amount from your policy goes directly to your wife and kids before anyone else. This also means that the money will be protected from paying off debts and will be prioritised for your family’s needs first.

8. Claim Payout Customisation

We have made it clear that, with your term insurance policy, your family will receive the death benefit if something unexpected happens to you.

Now, you can decide how your family will get this money. There are different ways they can receive it, and you can pick the one that works best for them. The following are some common options:

• Lump Sum Payout Option: With this option, your family gets all the money at once. This would be a good choice if you have any unpaid loans or debts.
• Monthly Income Payout Option: Now, with this option, the insurer will pay the claim amount in monthly instalments for a period of time. This is great if you want to make sure your family has enough money for their everyday needs.
• Lump-Sum With Monthly Income Payout Option: This combines both lump-sum and monthly installments. Here the insurer pays part of the claim amount in one go, and the rest is paid out in monthly installments over a period of time.

9. Picking Riders

Think of riders as extra toppings on a pizza. When you order a pizza, you get the basic version with cheese and sauce, but you can add toppings like mushrooms, olives, or pepperoni to make it even better and more enjoyable to your taste.

Similarly, riders are easy-to-add features that you can choose with your term policy. They help enhance the coverage of your base policy and offer an additional payout if anything goes wrong. For example, if you buy the “waiver of premium due to accidental disability” rider, all your future policy premiums will be waived off if you are permanently disabled by an accident.

Here’s a list of some common riders you can opt for with your term insurance plan:

• Critical Illness Rider
• Accidental Disability Rider
• Waiver Of Premium Rider
• Accidental Death Benefit, etc.

Just like how adding toppings makes your pizza more enjoyable, adding riders makes your term plan more compact and tailored to your needs.

Please note that it is an indicative list. There can be other types of riders available, too, depending on the insurer you choose. Make sure you check the relevant policy documents so you are well-informed before making any purchase. This is a great way to customise your insurance plan to better meet your needs and provide extra protection for you and your family.

10. Nominee Of The Policy

When you buy a term insurance policy, you would need to choose someone who will receive the money if something happens to you while the policy is active. This person is called a nominee. You can select any member of your family to be your nominee. It can be your spouse, children, parents or siblings.

It is very important to choose a nominee because they will receive the claim amount from your insurance company in case of your unfortunate demise. This money can support your family financially during a difficult time, covering expenses and ensuring their well-being. You need to make sure to inform your nominee about their role. Inform them about your policy details so that the insurance company can process the claim smoothly when needed.

11. Proper Research And Comparison

Before you buy term insurance, it is really important to do thorough research and compare your options. This means looking at different insurance policies and checking out what each one offers. Check their benefits, features they include, any drawbacks they might have and how they compare to each other.

Remember, it is not just the policies themselves but also the company that provides them. You will have to look into things like how well the insurance company’s customer service works. If they have performed well in the past with other customers, and most importantly, how reliable are they?

By doing your homework and comparing everything carefully, you will feel confident about choosing the right insurance to protect yourself and your near ones.

12. Seek Help From A Financial Advisor

When you are buying term insurance, you are making a decision that protects you and your family’s financial future. To make sure you choose the right policy, you should consider onboarding a trustworthy financial advisor. A good advisor will assist you throughout the process, helping you understand the options available and suggesting the best features for your needs. They would ensure that all the paperwork is handled correctly and that your policy is set up properly. If something happens to you while the policy is active, they will also help your family with the claim process. Also, make sure they receive the money quickly and without any complications.

Having a reliable financial advisor by your side can give you peace of mind. Knowing that you have made the best choices for protecting your loved ones financially. They’ll help you navigate the complexities of insurance so that you can focus on what matters most.

Wrapping Up!

We hope all this makes sense to you and you can make a sensible decision about choosing the right term insurance plan for yourself. In this article, we have guided you to find the best plan with a modest salary of Rs. 35,000. Individuals with already a term insurance plan can also check out the details above and see if you have missed researching something and can enhance their coverage now!

Ultimately, term insurance is more than just a financial product. It is a pillar of support that ensures stability for those we cherish the most. Individuals like Rahul can confidently secure their family’s future while pursuing their dreams.

Remember, the journey towards financial security begins with understanding your options, making smart choices and protecting what matters most- your family’s well-being and happiness. So, take that first step today towards securing your future with term insurance.