Getting a term plan is a good idea for anyone – more so when you are an entrepreneur. Wondering what makes a term insurance policy even more important for a self-employed individual? Read on to find the answers.
- Absence of major employer benefits
When you work at a government job or even certain private jobs, you get specific employer benefits, such as access to a provident fund, health insurance, life insurance cover, and so on. However, as an entrepreneur, you are not entitled to any such benefits.
Now, though there is no retirement age when you are self-employed, you are going to take a break from work at some point. You will need a particular income during that time so that you can retire at peace and still provide for your family.
- Reducing your taxable income
As per Section 80C of the Income Tax Act, 1961, the premiums paid for a term insurance plan get tax exemption up to ₹1.5 lakh. So, if you are an entrepreneur looking to reduce your taxable income, you need to calculate term insurance premium as it’ll help you understand your tax liability.
- Facing an unsteady income situation
When you work in a formal sector, you get a regular monthly income. You can run your monthly expenditure and save up as required from that monthly income. However, things are different when you are self-employed.
The business might not be going too well, and in such a situation, the untimely demise of the policyholder or even a sudden ailment can mean major financial woes for the family. Getting a term insurance plan is a good idea because it can act like a backup plan that secures your family from facing any financial hardship in your absence.
- The riders to get support in disease and disability
A term insurance plan allows you to add riders, which might increase the premium to some extent but can be useful in the long run. The riders, such as accidental injury cover or accelerated death benefits, offer financial support in case of an accident or serious illness. As an entrepreneur, you will be glad that you arranged for this monetary support and did not have to rely on what you saved up from your business.
- Repaying the loans that you might have taken
When you run a business, you might need to take loans for many reasons. You might have taken loans whose burden will fall on your family in your absence. However, if you have a term plan, then they can use that money to pay off the loan.
The bottom line
So, if you are a self-employed individual, then you need to apply for term insurance now. Do not wait any longer because emergencies can strike unannounced, and you better remain prepared for that beforehand.
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