Even though you expect yourself to be of sound health, and therefore, be able to take care of your family’s financial needs all by yourself, you need to create a financial safety net for your family nevertheless, so that they have a backup to help take care of their financial needs in case something happens to you. A term insurance policy does precisely this – provide your family with a significantly large amount of money (also known as sum assured) in case of your unfortunate demise within the policy period. Moreover, having term insurance allows you to help protect yourself against the crucial 3 Ds of your life: Disease, Disability, and Death. If you are a salaried person, here’s why you need to have term insurance.
Financial Goals Security Through Life Cover
As soon as you start earning an income, you begin creating a list of goals that you wish to achieve. For all of these goals, you need to have an adequate amount of money. In other words, you need to start with financial planning as soon as possible – identifying different goals as per various stages of life. For example, if you are married and recently had a child, you need first to consider purchasing term insurance before you start investing for your child as a parent. With a term insurance plan in place, you can make sure that your family would easily maintain their existing standard of living, even when you are not there to provide for them. In other words, term insurance acts as an income replacement tool to help provide the necessary financial support to your family, at different life stages.
There is a Risk in Self-funding Goals
(image source: Shutterstock) As a salaried, family person, there are some common avenues that you wish to invest, to create wealth, such as mutual funds, public provident fund (PPF), shares, online savings plans, gold, and real estate. All of these instruments are self-funded in nature, which implies that you need to be alive and continue investing regularly in them if you wish to keep earning capital appreciation on your investment till it is time to put your wealth to use. However, life is full of surprises; therefore, the risk of your early demise or loss of income exists at all times. This risk, in turn, can quickly derail your entire investment process. Thus, you need to make sure that even if something happens to you, you have a financial safety net for your family to fall back onto in case of your untimely demise.
Term Insurance Plans Have a Low Premium Rate
The premium payable for a term insurance plan is relatively lower than any other life insurance instrument because there is no investment component in the amount insured. Moreover, claim rejections in case of online term insurance plans is relatively lower if the policy has been active for a few years. For this, you need to compare term insurance plans at an early age (say in your 20s or 30s) and make complete disclosures about your health, lifestyle, habits, and financials to make sure that your insurance claim may not be rejected in case of your demise.
You Can Enhance Term Insurance Protection Through Riders
Term insurance plans usually offer a variety of add-ons in the form of riders, which help strengthen the term insurance coverage through an additional layer of insurance benefits, albeit at a nominal cost. Term insurance plans from reputable insurers such as Max Life Insurance offer various rider options to protect you against permanent or partial disability, critical illnesses, and accidental death. In case you are unable to continue with the premium payment towards the policy, the waiver of premium rider helps ensure that all the future premiums are paid for, and your policy continues to provide the desired benefits.
