It’s good to be optimistic in life, but it’s equally necessary to be pragmatic. As much as you want to believe that everything will go right in your life, there’s always an element of uncertainty – ‘what if?’ But term insurance turns out as the ideal solution to this concern.
Most people view term plan as a liability, without comprehending its significance in an individual’s life. The fact is, term insurance takes care of all your liabilities and responsibilities in your absence. It serves as a financial guardian to your family in case of your sudden demise. Let’s understand what term insurance is, and how it can benefit you and your family.
A term insurance only covers death and has no maturity benefits. It is the purest form of life insurance and therefore its premium is comparatively low. Listed below are some term plan benefits that you must know before making a choice for your family’s future.
- To secure your family: If your family is solely dependent on you, you shouldn’t give a second thought to buying term insurance. In case of your sudden death, your family will still stay financially secured and not struggle to meet its daily financial requirements with a term insurance plan in place. Even though their emotional loss is irreplaceable, they can still carry on with their life without any financial hitches.
- Safeguards against liabilities: We tend to take on several liabilities in our life, such as buying a new home, a new car, taking a loan to finance children’s education, etc. Since most of these liabilities are huge and cannot be paid in one-go, we usually pay them in smaller installments over a period of time. But in case an unfortunate incident occurs mid-way, the burden of repaying these liabilities comes upon your family. And you certainly don’t want that to happen. Term insurance policy will safeguard your loved ones from bearing the brunt of such financial problems.
- Support for nuclear families: Unlike olden days, when extended families would stay together under the same roof, all responsibilities were shared equally. In the event of someone’s death, there used to be a strong support system to lean on. However, in a nuclear age, where you are the sole support system to your family, term plans help your family to deal with any financial repercussions in your absence.
- Cost-effective: The premium for term insurance is much lower than that of money back policies. And if you buy a term plan early, the monthly premium will come down even further.
So it makes complete financial sense to invest in a term insurance plan and secure your family’s future while you’re still young and fit. The general thumb rule says that your term insurance cover should be at least 20 times your annual income. Feel free to use a term insurance calculator to help you analyze, compare and plan your insurance coverage.