You have your dream job, your dream car, and your dream home. Your life has fallen in place and you are enjoying a comfortable and peaceful life. But have you ever imagined what will happen to your family if you ever have to leave them behind at this stage? You might have loans left for your house and car, your family might be surviving from your income alone- how can you financially protect them in such a testing time?
A term life insurance might be your best bet in these unfortunate situations.
A term insurance is a life insurance policy for a specific term. Unlike in a regular life insurance policy, the premium will be lower, but it is not refundable if the policyholder survives the term period. At the same time, a term insurance’s sum-insured could be high with less premium amount. Let’s see why it is important to buy term insurance.
Why is term insurance important?
- Protection of your family – Like in the above instance, life can get unpredictable and there should be something that will protect your family financially when you can’t provide for them. A term insurance does exactly that. At the time of the unfortunate demise of a policy holder, the beneficiary of the term insurance, which in most cases is a family member, will receive the sum-insured. This money could help your family meet their day-to-day needs.
- Coverage on debts – You might have recently taken out a loan for a new car or a new house. The loan amount could be something you can afford with your income but what about when you are not there to repay them unfortunately? This debt would fall upon your family and could burden them. But if you have a term insurance in place with sufficient cover, your family can easily repay the debts and liabilities with the coverage amount.
- Children’s education – If you have kids, their education is of paramount importance. You might have big plans for them, and they should stay the same even when you can’t provide for them. That is where a term insurance can help. If you have sufficient coverage, it can help your family meet your kids’ education needs without any hardships.
- Peace of mind – Nothing is more important and you and your family’s peace of mind. When you have a sufficient term insurance in place, you know your family is financially protected at any time and that will give you the braveness to experiment and do what you love with your life.
The importance of term insurance is unquestionable. If you are also thinking about buying one, let’s go through a few pointers that will help you choose the right term plan.
- Choose a correct amount – Your sum-insured should comfortably cover all your debts and liabilities and should still be enough for your family to meet their long- and short-term financial needs. The amount you need to insure depends on your family’s financial condition, but experts say that the sum-insured should be at least ten times your annual income.
- Choose an adequate tenure – When you buy term insurance, choosing a right tenure is of paramount importance. If you are young and healthy, choosing a longer tenure has its benefits including lower premium prices. You cannot buy a term insurance after the age of 65 and if you are nearing that age also, it’s wise to buy for a longer tenure.
At the end of the day, here too, choosing a tenure according to your family’s needs stands important.
- Add appropriate riders – Riders are add-ons to your insurance policy that will give additional benefits above the insurance coverage. These can be beneficial for your family so choosing one while buying term insurance become important. For instance, if you work in a hostile working condition, an accidental death cover add-on which will give additional monetary benefits if a demise happens due to an accident, could be helpful.
- Plan with your family – Talking about term insurance could get difficult for families. But it is important that you do it so that the process of claiming it is easy if they ever must. Your family should have the below basic information.
- What is term insurance?
- Who is the beneficiary?
- What is the sum-insured and riders added?
- How to claim the amount if there is ever a need?
Term insurance is important and choosing the right one is even more important. If you are planning to buy one, make sure you do your research, use tools like term insurance premium calculator, follow the above pointers and choose the right one.