Have you ever thought about how your family will meet the day-to-day expenses and long-term financial objectives if you are no longer there to take care of them? If the answer to this question is no, then it is the right time to buy an insurance plan.
It is advisable to invest a part of your income in a term insurance plan, as it is one of the most sought-after insurance policies available in the market today. If you are skeptical about the term insurance meaning, then read on.
A term insurance plan is a type of life insurance plan that pays the death benefits to your nominees if anything untoward happens with you during the policy tenure. A term plan can act as an income replacement tool even if you are no longer around. It offers a substantial sum assured at an affordable premium to help you secure your family’s financial future. The sum assured that your loved ones will receive in case of your untimely absence can help them to live a financially independent life. It becomes easy for them to meet the household expenses, pay your outstanding liabilities, and fund your child’s education and wedding.
Unlike conventional life insurance plans, a term policy does not have any investment component that can assure a sum on maturity. However, it still acts as a solid foundation for any financial portfolio. Here are a few term insurance benefits:
Provides monetary stability to the financial dependents
Let us explain this with an illustration. Rajesh is working with a leading multinational company as a software engineer. He has bought an online term policy with a sum assured of INR 1.5 crore and has kept his wife Pooja, a homemaker as a nominee. Rajesh meets with an accident and loses his life. There is no replacement for a human loss, but income replacement can act as a safety net for the family. Here, Pooja had to deal with a distressful situation, but she did not have to be worried about the family’s financial future, as Rajesh had selected a high sum assured. So, the death benefit replaced the income of the breadwinner for years.
Offers a high sum assured at a low premium
As a term plan only provides the death benefit, you can leave behind a large amount for your loved ones, that too, by paying economical premiums. You may be curious to know what should be the ideal sum assured. The basic thumb rule is that if you are aged below 40, the sum assured must be around 20 to 30 times your yearly income. However, before determining the life cover value, consider the household expenses, medical costs, financial objectives, liabilities, assets, and your family’s lifestyle. Additionally, you need to take the inflation aspect into account while finalizing the sum assured. Remember, that your family’s monetary stability is dependent on this amount, which they will get in case of a tragic event. So, if you do not want your family to bear the financial burden and rely on someone else, it is essential to opt for an enormous sum assured.
Gives the option to choose riders
One of the main term insurance benefits is that you can purchase riders like accidental death benefit rider, critical illness rider, and income benefit rider, among others to increase the scope of your plan and avail of additional benefits. So, along with a high sum assured, opting for suitable riders can be helpful.
The increased stress levels, improper diet, and poor lifestyle-related habits have made life unpredictable. You do not know what lies ahead in the future. In case of any unfortunate event, your family will have to bear the emotional loss of a dear one as well as the monetary strain. Therefore, safeguarding the economic well-being of your family members ones should be the first thing in your financial plan. The inclusion of an online term policy in your investment portfolio will strengthen its foundation and will provide much-needed financial protection to your loved ones.