A Term Plan is a Financial Safety Net for Your Family in Case of a Sudden Mishap
Sixteen people died every hour in India in 2014 due to road accidents, says an article published in The Times of India in July 2015. Death can come knocking your door anytime, whether accidental or not. Therefore, it is essential that you plan to combat life’s uncertainties before they hit you. Have you ever thought about the financial stress your family might have to go through in the event of your untimely death? The good news is that you can avert this financial stress completely with the help of term insurance.
Benefits of a Term Policy
There are five types of insurance policies available in the market: term plans, ULIPs, money-back, endowment and whole-life. A term policy is the only pure insurance product, while all other policies are part investment products. The sole purpose of life insurance is to provide financial security to your loved ones after your death. A term policy does the job well! It offers the highest cover at the lowest cost because the entire premium amount goes towards funding the cover. Here is how you can provide for your loved ones with a term plan:
- Provide for Your Family’s Daily Expenses – The sum assured that your family will receive after your death can help maintain their standard of living and pay for daily expenses. On the other hand, in case there is no insurance, your family might have to forego some essential needs. Factor in the inflation rate while buying a policy. You can also choose different modes of payment. It can be in the form of lump-sum payment or in the form of monthly payouts. It could also be a combination of the two.
- Pay Off your Debts – Wouldn’t it be worse if your family has to deal with death and pay off your debts as well? Choose a cover amount that can be used to pay off your debts, if needed. Also, make sure to choose a minimum tenure during which you expect to repay your loans.
- Finance Your Child’s Education and Marriage – You must keep in mind the expenses that might be incurred on your child’s education and marriage. An adequate sum assured will ensure that your child does not have to alter his study plans because of lack of funds. You must choose a tenure by the end of which you expect your child to become independent. Ideally, you should buy a cover 10 to 12 times your annual income.
You might argue that term insurance is not a viable option considering it only provides death benefits and no survival benefits. However, being cheap in nature, it gives you the opportunity to buy cover that can help meet your family’s financial needs after your death in every way possible. Moreover, it gives you peace of mind that they would not to face a cash crunch in case of an emergency.