A term plan is a reliable way to ensure your family’s financial security in your absence. It provides your family with a lump sum payment, which can be used to meet daily expenses, outstanding debts, and long-term objectives, such as education. Especially with increasing uncertainties and costs, having a term plan in place helps your family stay safe and financially secure even if you are not around.
What Makes a Term Plan Essential?
Pure Life Cover: A term plan provides pure life protection without any investment or savings features. This means you’re paying solely for the insurance coverage, which helps keep premiums low while providing extensive protection.
Affordable Premiums for High Coverage: Term plans are affordable, even with a high sum like ₹1 crore or ₹2 crore term insurance. For instance, a healthy 30-year-old non-smoker can get a ₹ 2 crore cover at affordable premiums.
A ₹2 crore term insurance payout can be of help to your family in the following ways:
- Loan repayment: A ₹2 crore term plan can be used to clear home or personal loans. This ensures your family is not burdened with such financial debts in your absence.
- Education of children: It can cover your children’s education, allowing them to continue without disruption.
- Medical emergencies: If a medical emergency occurs, the insurance payout can help to pay health-related costs. This minimises the pressure on your family to utilise their savings or borrow money, thus supporting them financially in unexpected circumstances.
- Maintenance of lifestyle: A ₹2 crore term plan can assist your family in sustaining daily life, meeting necessities and financial responsibilities for bills, groceries, and other important expenses.
Riders: Most term plans also offer riders for extra benefits. Some of the most common riders are critical illness, accidental death, or waiver of premium, letting you customise your plan to fit your needs perfectly.
Flexibility: One of the great things about term plans is how flexible they can be. You can choose the coverage amount, policy duration, and more. Several term plans also offer flexibility when adjusting your coverage amount. This means you can increase or decrease the sum assured depending on your evolving needs.
Who Should Consider It?
- Individuals with dependents: If your family relies on your income to maintain their current lifestyle, a term plan becomes a safety net in your absence.
- Young couples starting a family: Starting early not only locks in low premiums but also ensures long-term coverage throughout key life stages.
- Homeowners with loans: If you have any major outstanding loans, like a home or an education loan, they will be left for your family to pay if an unforeseen event were to happen. A term plan will cover those financial liabilities.
- Business owners or self-employed individuals: If you run a business, your family could be exposed to additional financial risk. A term plan cushions this impact.
- Anyone seeking peace of mind: Even if you have savings, insurance adds a protective layer to your long-term financial planning. Knowing that your loved ones will be financially protected brings a sense of comfort that’s hard to put a price on.
Reasons to Buy Term Insurance Early
The ideal time to purchase a term plan is when you are young and healthy, as it offers several advantages for long-term value:
- Lower Premiums: The premiums are more affordable when you buy a term plan at a younger age, since insurers consider you less risky to insure.
- Longer Coverage: Choosing a longer policy term keeps your family financially protected during the years when your income supports major expenses like loans, education, and daily living costs.
- Better Insurability: Early purchase eliminates the risk of rejection because of future health conditions or lifestyle changes. Plus, you may qualify for higher coverage amounts while still in good health.
- Financial Discipline: Purchasing term insurance early on creates a sense of financial responsibility. It sets the foundation for disciplined money management and long-term financial planning, particularly in the early years of your career, when expenses and financial commitments are still growing.
- Lock-In Benefits for the Entire Term: Once you purchase a term plan, your premium remains fixed throughout the policy term. Buying early helps you lock in low premiums and long-term benefits before your risk profile changes.
Final Thoughts
Having a term plan is essential for your family’s financial security. Selecting the right plan is equally important. So, explore your options carefully and choose a plan that best suits your needs and your family’s requirements. Think about riders like critical illness and accident benefits for protection against various life uncertainties. You can also use an online term insurance calculator to estimate your premiums based on your inputs.
Remember, as life moves forward and responsibilities grow, so do your financial needs. With the rising cost of living, choosing a high sum assured term insurance plan early on is a smart move.
