Wanting the best for our loved ones is a universal human trait. But given the uncertainties lurking around every corner, no one can predict the next thing that could come at us. Hence, planning for these sudden developments and taking concrete steps to secure our family's future becomes paramount. For there is no way of knowing as to when one might lose the ability to provide for them due to disability or the sudden loss of life.
Term Plans Explained:
A Term Plan is a type of life insurance that provides life cover to a person and ensures that his/her dependents are protected financially in case something unfortunate were to happen to that person. Term plans offer coverage for a specified period of time and pay out the coverage amount to the family of the life insured in the event of his/her unfortunate demise or on the happening of certain pre defined events within a specified period of time. Term insurance plans offer adequate coverage at an affordable price. There is no maturity value or survival benefit in a term plan. Term plan benefits can be offered through lump sum payment or regular income stream or a combination of both. One should choose the right benefit type basis one's protection requirement.
How Term Insurance can help:
Keeping us safe and secure: Irrespective of whether one is the sole breadwinner in the family or has others pitching in with the finances, one still has to work towards securing his or her loved ones with new family future secure plan. A term life insurance policy helps in securing the family's future in your absence. From taking care of the daily expenses, to other, more significant expenses like professional education for the children and their marriage, having a safety net helps!
Maintaining living standards: As your loved ones cope with your absence, they should not have the load of having to fend for themselves. A carefully selected term insurance policy would ensure that they continue to enjoy similar levels of comfort and maintain their living standards as they go on with life.
Protecting against loans and liabilities: Loans of any kind (especially the long term, financially intensive types) can put a fair amount of strain on the family in your absence. Having a term life policy in place that would cover the outstanding amount would help go a long way in taking the burden off their shoulders.
Putting worries to rest: Having a term life cover takes the guess-work out of the equation. You can enjoy total peace-of-mind, knowing well that the family would be taken care of even in the face of any eventuality.
Offering Value-for-Money Coverage: Term insurance plans are usually the most affordable form of life insurance as they come with lower premium rates for high value of life covers. For example, you could protect your loved ones to the tune of Rs. 1 crore for a premium of just Rs. 7,400 per year. (For a healthy 30 year old non-smoker male with a policy term of 30 years).
With multiple term plans available in the market today, it becomes very crucial to choose right term insurance plan. Apart from price and convenience, there are certain critical factors that you should take into account like the financial standing of the prospect life insurer, the company's claim settlement process and settlement ratio, the service standards, customer base and reputation. Also, you should carefully evaluate the options available to you against your protection requirements, weigh in the pros and cons and compare with available alternatives and choose the right type of coverage benefits that you would want for your family so that their various requirements are met, even when you are not around.
How much is good enough?
Considering that the financial requirements differ across individuals, there is no fixed amount that can be ascertained as the right one. However, factors such as the number of dependents, key capital-intensive expenses planned in the future, outstanding loans & mortgages, etc. do have a bearing in deciding upon how much insurance one would need.