It is nearly impossible to predict when an unfortunate event will occur and leave your loved ones stranded. But, you can rest assured that your family will remain financially protected, even in your absence - if you have term insurance.
Term insurance is the most affordable and simplest type of life insurance. It's the easiest way to financially protect your family when you won’t be around.
For a 30-year-old, non-smoker male, the premium for a 1 crore term plan with a coverage of up to 60 years is approximately Rs 900 with taxes. Did you notice that this is less than the cost you incur when you go out for dinner?
If you can create a safety net for your family at such an affordable price, why not take advantage of it?
Besides low premiums, there are various other reasons that make term insurance an ideal option. Let’s have a look!
5 Reasons For Investing In A Term Insurance Plan
To Get High Coverage At Low Cost
It is generally difficult to manage the premiums for high coverage under any type of life insurance plan. However, term insurance allows you to choose adequate coverage at a relatively low cost.
As discussed before, the cost of an INR 1 crore term insurance policy is as low as Rs 900 per month. So, for each rupee you invest, your family will receive Rs 1000 back if you pass away while the policy is in effect. Hence, it is quite evident that you can invest in sufficient cover for your family without hurting your savings.
To Ensure Financial Stability
The primary reason for opting for term insurance is to secure your family's financial future. If you are the sole breadwinner of your family, your sudden demise will not only be an emotional loss, but it will also leave them in financial turmoil. Keeping up with even household expenses and basic necessities might turn out to be extremely challenging.
However, if you have a term insurance plan, you won't have to worry. Term insurance is the most suitable choice if you have financial dependents - family members who rely on your income such as your spouse, kids, siblings, parents etc. In case you pass away, the cover amount is given to your family as a death benefit, giving them financial security and ensuring they live a comfortable life - even in your absence.
To Fulfil Your Financial Dependents’ Goals
Financial dependents depend on your earnings for their financial goals and needs. The coverage you choose will depend on these.
Estimate the term insurance coverage by assessing the short-term and long-term financial needs of your dependents.
Short-term goals include regular expenses such as groceries, bills, rent, school fees, etc.
Long-term goals include long-term dreams and aspirations such as a higher education abroad, a big fat wedding and travel plans.
By knowing these needs, you can determine how much money you should leave behind - so that your dependents' lifestyles and aspirations are not disrupted.
To Get Additional Benefits
Most term insurance plans offer add-ons known as riders, which can be added to your base plan at an additional yet reasonable cost. They enhance your coverage by offering additional benefits - other than the death cover.
You can choose from a variety of riders -
Critical illness rider
Accidental death benefit rider
Accidental disability rider
Waiver of premium rider
Surgical care rider
Hospital care rider
This is an indicative list of riders. They can vary across insurers.
For instance, you are required to undergo a 5-day hospitalisation for surgery. If you have opted for a Hospital Care Rider along with your term plan, the insurer will pay a specific amount, say Rs. 5000 for each day you’re hospitalised, i.e., Rs. 25000 in total. This amount can be used to cover miscellaneous costs like food, medicines, or anything else required for recuperation.
To Pay Off Any Loans
If you have taken a loan of any kind - be it a personal loan, home loan, automobile loan, or education loan - and in the unfortunate circumstance that you pass away before repaying it, your family will have to shoulder its burden. But, if you invest in a term insurance plan, your family can use the cover amount to comfortably repay the loan.
If you have family members who are financially dependent on you - term insurance is your best bet. In case you pass away unexpectedly during the policy period, your family receives the entire term insurance cover amount. With this amount, you can ensure that your family will be financially secure even in your absence. Last but not least, buy term insurance only if you have financial dependents or large debts.