Everyone works hard to create a good life. We set aside money for a new house, our children’s schooling, and a comfortable old age. However, life can sometimes change so quickly. What if the main breadwinner of the family is suddenly gone? It is such a dreadful thought, but we have to be prepared for it to safeguard our dear ones.
This is when a term insurance plan comes in handy. It is the most straightforward way, ensuring that your family will be financially secure irrespective of your presence.
What Is Term Insurance?
In case you are still thinking about what is term insurance, you should consider it a protection measure. It is a kind of life insurance that insures you for a particular “term” or several years.
Below is a very simple explanation of the process:
- You pay a small amount of money (the premium) monthly or yearly to an insurance company.
- The company agrees to grant your family a huge amount of money if you die within the specified time.
- With this money, your family can buy food, pay rent, cover school fees, clear debts, etc., without having to struggle.
Think of it as a “pure” protection plan. It doesn’t combine investment with insurance. Its main concern is only one: keeping your family safe.
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How come it is so common in India?
Family is number one in India. We have joint families where earners might be very few, even just one or two. Term insurance is a hit because it gives massive coverage at a really low premium.
Just for the price of a couple of pizzas or a movie ticket every month, you can be covered for ₹1 Crore. And that makes it reasonably priced for everyone, from a young office worker in Bengaluru to a shop owner in a small town.
Main Advantages: Why You Should Have It
1. Substantial protection with low price
This is definitely the biggest benefit. Since term insurance only protects against death and does not offer “money back” at the end, the price is very low. It is by far the least expensive way to purchase a large life cover.
2. A Sense of Security
A big part of peace of mind is not worrying where the money for your spouse, children, and elderly parents to live will come from. You can sleep better knowing that even without you, their lives will be taken care of.
3. Addressing Your Financial Obligations
In fact, a lot of Indians have a home or a car loan that they are repaying. Even if the borrower dies, the lender would still want their money. If you have a term insurance, in that case, your family can use the insurance proceeds to repay the loans. No one will lose their house in this situation.
4. Tax Benefits
Buying insurance is one of the ways that the Government of India encourages people. The premium that you pay lessens the amount of tax that you have to pay. So, this is a win-win for your finances.
Who Should Buy Term Insurance?
Simply put, if you have anyone relying on you, you should get it.
- Young Professionals: If you have just joined the working world, get a policy now. Being young is a great advantage, as your premium will be the cheapest. This low amount will be with you your entire life!
- Parents: You wish to see your child become a doctor, artist, or engineer. A term policy will be a safeguard to keep their education uninterrupted, even if you are not there.
- Married Couples: It will be a source for your spouse to carry on the same lifestyle, meeting daily expenses without any worry.
- Business Owners: A term plan will be a safeguard for your family against those business liabilities if you have any business debts.
How to Choose the Right Plan?
Here are three guidelines for you when figuring out term insurance for what you need:
- Work Out Your Coverage: It is generally suggested to have coverage that is 10 to 15 times your annual income. If your yearly salary is ₹5 Lakh, you should look for a cover between ₹50 Lakh and ₹75 Lakh.
- See Company’s Track Record: Ask for the “Claim Settlement Ratio.” This is an indicator that shows out of every 100 requests how many claims the company has paid. In such cases, pick a company with the highest percentage (over 95%).
- Be Truthful: Disclose your real health and habits (like smoking) when filling the form. This guarantees that your family will not face any issues in getting the money later.
Keep It Simple
You don’t have to be a finance expert to get a term insurance plan. It’s just a simple agreement. You make a small payment now so that your family never has to ask anyone for money later. Term insurance is the best way to ensure that the old saying, “Sab thik ho jayega” (Everything will be alright), remains true for your family, whatever may be the future.
Don’t hold off for “tomorrow” or “the right time.” If you’re wondering when is the best time to secure your family’s happiness is, it was yesterday. Today is the second-best time. Make that little move and provide your loved ones with the gift of a secured future. It is the most selfless act you can do.
