Most individuals have begun opting for term insurance policies to safeguard their dependents from the uncertainties in life. But have you been finding it difficult to purchase a term plan due to your income inflow? As a self-employed individual or a freelancer, your income may vary when compared to a salaried person who gets a monthly salary. Thus, committing to paying for an insurance policy for 20-25 years can become a burden for self-employed people. But what if we told you that you can easily purchase a term policy without worrying about premium payment? Continue reading to understand more about the limited pay option in term insurance.
What Is Limited Pay Option in Term Insurance?
The limited payment option is where the policyholder makes periodic payments towards the insurance policy but for a limited period of time. Unlike the regular pay option where you pay the premium for the entire policy tenure, the limited option offers a shorter payment duration. For example, your term insurance tenure consists of 25 years, and you select the limited pay option with the payment duration of 15 years. With this, you complete your insurance payment earlier than in the regular premium payment option. Thus, the financial burden of making regular payments is off your shoulder in a shorter period. Now, find out the pros of opting for such an insurance option:
Benefits of Limited Insurance Pay Option for Self-Employed Individuals
Here are some key perks of opting for the limited premium payment option in term plans if you are self-employed:
- Premium payments get over soon
Just like the name, the limited payment option means you finish paying for term insurance earlier. Because of your unsure cash inflow, you can pay off your term insurance premiums and enjoy the coverage for a longer period. While you are younger, you can continue to work hard and earn a living to pay for your insurance policy. But as you grow older, such a thing won’t be possible and thus, the limited pay option helps you with this.
- Fewer chances of policy lapse
As you have chosen a limited premium payment option, you can be worry-free about your policy lapsing. When it comes to making regular payments for 25 years, it is natural to forget about it. However, the limited pay option won’t let that happen to you and secure your coverage without any hitches.
- More tax benefits
Under Section 80C of the Income Tax Act, 1961, you can claim a maximum amount of INR 1.5 Lakh as a deduction per financial year. The premiums paid towards your term plans are also eligible for deductions under Section 80C. As your premium shall be higher due to the limited pay option, you can make complete use of the tax benefits available. Also, if you do not make any claims under this section, you can claim up to the upper limit set in case your premium is that high.
- Suitable for early retirement
Who wouldn’t love to retire early from working for a set period? If you are one of them who wants to earn only for a specific amount of time, then the limited pay option is for you. You shall be done with the premiums early, ready to retire with a risk cover! Such an option is also suitable for individuals who want a short career. Instead of committing for the long term, you can finish paying all the premiums. Estimate how much you will have to pay with the limited option on the term plan premium calculator now!
- Offers coverage for a longer time
As you are self-employed, you don’t have the restriction of working until the age of 60. So, if you plan on working beyond this period, having coverage after your retirement age shall be helpful. In case something were to happen to you, the lump sum payout will replace your income and offer financial support to your family. Even if you aren’t working after retirement, the death benefit will leave your dependents with enough help.
With this, you are now aware of the benefits of the limited pay option available under term plans. So, hurry up and buy term insurance online for an affordable premium today!