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How Term Insurance Benefits Ease Your Retirement Planning

Prudent financial decisions taken early in life enable a peaceful retired life. Investments made to improve the lifestyle of your family are important but alongside you should plan for life after the regular income ceases. Investing in term insurance provides a financial safety net for your family in case of your untimely demise during the insurance term. Besides this, term insurance benefits ease your retirement planning in several ways. Read on to understand how it benefits.

What is Term Insurance?

Understanding the term plan meaning is crucial to value its benefits. Unlike a life insurance plan, a term plan does not reimburse the premiums paid during the insurance term. But it provides a financial safety net for your loved ones in case of your unfortunate demise during the insurance term. With the financial security of your family in place, you can invest the disposable income available after providing for the term insurance premium in diverse ways and create a hefty retirement corpus or emergency fund.

Benefits of Term Insurance in Retirement Planning

Retirement planning helps you and your partner to make the best of the golden years of your life. Being financially independent, you can lead a dignified life post-retirement. Retirement planning entails various steps such as budgeting your needs, building a corpus for old age, ensuring fund availability, paying off debts, etc. Term Insurance provides financial security to your family and takes care of all the debts and other financial goals set even in your absence. Additionally, here is how term insurance benefits your retirement planning.

1. Economical Premium:

Term Insurance can be for 10 to 30 years. If you invest in term insurance early in life for an extended period, the premium will be low and affordable. The funds you save on the premium can be invested in schemes that can help your money grow like mutual funds, fixed deposits, PPFs, etc. Term insurance in this way can help you build a retirement corpus while providing financial security for your family.

2. Provides Cover for Debts Incurred:

You can build a retirement corpus to make your post-retirement life peaceful without having to worry about repaying debts during your lifetime. In case of an eventuality, the burden of paying off debts or funding goals like children’s education and marriage, providing for medical emergencies, etc. will not be passed on to your family. The death claim proceeds can cover all the existing liabilities and also take care of future financial goals.

3. Has Option for Additional Covers:

Term insurance provides an option to provide financial support for events other than death. It also helps in making life easier for your family after your unfortunate demise. You can opt for additional covers like accidental benefits and critical illness benefits for an extra premium.

An accident can cause a temporary or permanent disability and can hamper your regular income. Accidental death and disability benefits can provide additional funds to cope with this damage caused to you by an accident. You will be able to manage household expenses without digging into your savings and your retirement plan will be in place.

Similarly, a critical illness like renal failure, cancer, cardiovascular disease, etc. can temporarily hurt your income. Besides, a large chunk goes into the treatment. In the absence of critical illness coverage, you will be forced to draw money from the retirement corpus or emergency funds. By providing for the treatment and offering financial support during the non-income period, this term insurance benefit helps you keep your retirement corpus intact.

If you opt for payment of premium for a long period under the term plan, you can also opt for a waiver of premium benefit. This option will come in handy when you file an accidental benefit or critical illness benefit when your income stops for a temporary period. You will not have to pay any premium to keep your life covered during this period.

4. Tax Benefit:

One of the term insurance benefits is the tax benefit. The premiums paid toward the term plan are eligible for tax benefits under Section 80C of the Income Tax Act 1961, leaving you with more disposable funds to invest in growth schemes.


Irrespective of whether you are young, married with children or approaching retirement, a term insurance plan can reduce your financial burden. The term insurance benefits in creating a legacy for your family. With affordable premiums, there will be disposal funds to create a retirement corpus by investing in growth schemes.

With an extra premium, the term insurance plan provides additional coverage by way of accidental benefits and critical illness benefits. An accidental benefit or critical illness claim will provide financial support for the period when your income stops.

Purchase a term insurance plan today if you do not have one to avail of the term insurance benefits to ease your retirement planning.

Disclaimer: The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal, tax or any other advice specific to you the user or anyone else. TurtleVerse does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.



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