Why Is It Essential to Think Beyond Your Employers Term Insurance?

3 months ago Rohit Shetty 0

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Life is a roller coaster, and there is nothing as important as your life. However, you never know what tomorrow might bring, and if you do not take the right decisions today, an unfortunate event could leave your family in financial trouble. Therefore, your priority should be to ensure financial security of your loved ones and a term insurance plan will provide you just that. It’s a life cover which will help secure the needs of your family in case of your untimely demise. Term insurance plan is one of the most important insurance products available in the market today.

It pains to think of your loved ones in trouble when you are not around, and you would never want them to see that day. This is why you need to plan for their security and make decisions that will secure their future. The importance of term insurance can never be exaggerated enough. It is an insurance plan which provides a cover for a specific period of time for a low premium. You can purchase the plan at any age and for a premium that fits your needs.

Employers Term Insurance

A lot of employers offer term insurance to their employees which are covered under their Group Term Insurance Plans. If you think that the employer’s term insurance offers adequate coverage and you have not purchased your individual term insurance plan, you could be making a huge mistake. Here is why you should not be dependent on the employer’s term insurance and should buy an independent policy right away.

Cover May Not Based on Your Needs

Every individual has different needs. The lifestyle of your family might be different from that of another employee, and your needs might be higher than that of others. The employer’s insurance cover might not be enough to meet your needs as the cover might be basic and generalized for all the employees. This is why you need to invest in an independent cover which is designed to fit your needs. You can purchase a cover that is perfect for your requirements and the amount of coverage you require.

What if You Switch your Job or Start Your Business?

The employer’s term insurance will only cover you as long as you are employed with them. The minute you switch your job or start a business, the term insurance stops. You will have no cover if you start your business and if you switch your job, you may or may not get a cover. Insurance cover is a perk and not a right, so it depends on the employer to provide a cover or not. The term insurance is heavily dependent on your employment status.

Lack of Tax Saving

When you invest in a term insurance plan, you can get a benefit of tax deduction on the amount of premium paid by you. There is a tax deduction offered under Section 80C for the premium amount, and this amount can be as high as INR 1,50,000. However, in case of employer’s term insurance, you do not get any tax benefit because you are not paying the premiums. This means your tax liability will not reduce even though you have a term plan.

Additional Benefits May Not be Available

Term insurance offers a number of additional benefits that fit your needs. You can purchase riders at an additional amount of premium. Many insurers like Max Life Insurance offer riders for permanent disability, an accident cover, critical illness and much more. If you own an independent cover, you will be able to purchase the riders as per your requirements, but this option is not available in case of an employer’s term insurance.

The term insurance offered by the employer is indeed a perk that comes with your job. However, you need to know that it is a basic cover and might not be enough for you. Also, if you change the job, you will have no cover for your life. It is important to invest in a quality term insurance plan to ensure that your life is covered at all times. There are a number of quality term insurance products available in the market. You need to estimate your needs and choose the plan (preferably, long-term) that is a perfect fit. Do not rely on anyone to cover for your life. If your employer provides term insurance for you, consider it only as the best short-term investment plan. But never make the mistake of depending solely on it.