Term insurance is highly recommended today for individuals with financial dependents or liabilities. If you do not have it yet, then you should gather information about the same and obtain it to financially secure your family. Here’s a basic guide to the plan and how it stacks up in this article.
What Term Insurance Means?
Note that financial security for the family was mentioned in the earlier paragraph. Term insurance is a gateway towards achieving the same and safeguarding your loved ones in your absence. Let’s take a heart-breaking scenario into consideration (God forbid it happens to someone).
Rajesh is a professional who is 45 years old and has a spouse and two young children. He has a good job and has spent freely on ensuring the best possible lifestyle for his family. However, due to a sudden heart attack, he passes away, unfortunately. In this situation, the family finds out that there are loans and credit card bills that still have to be repaid while finding it hard to manage household costs with the meager savings and investments that they have. Selling off their home is possibly the only way in the future that the children’s educational costs can be met.
Of course, you don’t want anything like this to ever happen. But what if it does? This is where securing your family financially is essential, especially if you have dependents and liabilities. That’s why you require term insurance plans. They give you a fixed sum assured that will help your family take care of its needs and maintain living standards without depending on anyone or compromising on future life goals.
How It Works?
It is possible to compare numerous term plans from insurance companies before selecting one that is right for your needs. Of course, choose the coverage amount carefully after working out how much your family might require in the future when you are not around. You can compare premiums and work out what you can pay in terms of your affordability as well. Thereafter, you have to apply for your policy by providing all necessary details accurately and transparently.
The insurance company will cover your life for the chosen duration of the policy. In case you pass away within this period, it will pay the fixed sum assured to your nominees. If you survive the policy tenure, then there will be no payout for pure term plans. However, some term plans come with a return of premium (ROP) option, where you will get back the premiums paid if you survive the policy duration. Keep in mind that ROP plans usually come with higher premiums compared to regular term plans.
You can pay your premiums as per your desired frequency, i.e., monthly, yearly, or quarterly. Some insurers may offer discounts for annual payments. There may also be specific options to periodically scale up your coverage amount as per your evolving needs, though this feature is not available in all term plans.
Conclusion
Term insurance is an important financial tool for individuals with dependents or significant liabilities. Put some effort into learning more about these plans and comparing the options offered by multiple insurers before making a final decision.
