Life does not come with guarantees. For most of us, family is our priority. You should have plans to protect (financially) them under all circumstances. When you do financial planning, you create goals for yourself to give the best life to your loved ones.
You have to take care of your parents, children's education, marriage and create a retirement corpus for yourself and your spouse. In case you die, your family will not only go through mental stress but also financial stress.
Term insurance is the simplest form of life insurance that financially protects your family if you die during the policy tenure. It ensures the dreams you have seen for your loved ones get fulfilled whether you are with them or not.
Who does Term Insurance Cover?
You can buy a term insurance plan at an affordable price and get high coverage under the plan. You can buy a term insurance plan as per your liabilities and your annual income. The term plan should be at least 15 to 20 times your annual income. If you have an existing loan like a home loan, you should factor in the loan amount while choosing a cover.
For example, you have a Rs 50 lakh home, and your annual expenses are Rs 6 lakh. In this case, you should opt for a cover of Rs 1.5 crore. In case of your death, the death coverage will be given to your beneficiary as a lump sum amount.
Your spouse receives the benefit amount that they can use for:
a) Paying off the home loanb) Use for annual expensesc) Invest in the future education needs of your children.
In this way, term insurance covers your family and loved ones in your absence.
Do You Need a Term Cover for Other Family Members?
The time has changed, and now the male is not the only breadwinner of the family. More and more women are working, and the household now is dependent on the income of both the members.
Let us take an example of Mr Shah's family. Mr Shah has taken a home loan, and a large part of his salary goes into paying the EMIs, and the rest he saves for future financial goals. Mrs Shah is also working, and she takes care of household expenses.
In the above example, both are equally important in running the household and achieving future goals. In such cases, you must take a term to cover your spouse also. If something happens to either of you, your partner and other family members can maintain the same living standard. You can either opt for a joint insurance term plan or buy separate term plans for yourself and your spouse.
Can Term Insurance Benefit Buyer?
Yes, a term plan can benefit a buyer. To understand how let us understand the types of term insurance plan you can opt for:
a) General Term Insurance cover
A simple term plan gives a lumpsum amount to the beneficiary in case of your death, and the policy terminates. In case you continue to live till the maturity date, no benefits are received.
b) Term Insurance with Return of Premium
In this option, if you pay your premium regularly then at maturity of the policy, you get back the premium you have paid. You get the survival benefits also.
For example, you buy a 30 years term plan with a return of premium option with a cover of Rs 50 lakh and a yearly premium of Rs 12,000. After 30 years, when the policy matures, you will receive Rs 3,60,000. In case of your unfortunate death, the beneficiary will receive Rs 50 lakh.
Five Term Insurance Features for the Benefit of Your Family
If you want to provide the best term insurance cover to your family, you need to look for a few features in the plan. For example, Canara HSBC Life Insurance iSelect Smart360 Term Plan offers multiple benefits to your family in a single term plan:
1. Add Your Homemaker Spouse to the Plan
The plan offers you the option to add your spouse to the same policy with the discounted premium. Instead of buying two separate policies and pay a double premium, you have an option to add your spouse and pay a combined lower premium.
2. Increase Life Cover As Per Need
If you just got married, you may feel coverage of Rs 50 lakh is sufficient. However, when you have children, the cover may feel small. Instead of buying a new term plan, you can increase the coverage of your existing plan.
3. Receive Payment As Per Choice
While buying the term plan, you have the option to choose how your beneficiary will receive the cover amount. They can either take the coverage amount as a lump sum amount, as monthly income, or as a combination of both. In the combination of both, you have the flexibility to choose the per cent you want as lumpsum.
Depending on your need, you can decide on a lumpsum per cent - 25%, 50%, or 75%. For example, if the cover amount is Rs 1 crore and you have a home loan of Rs 50 lakh, 50% can be taken as a lump sum and the remaining as monthly.
4. Additional Benefits
With the iSelect Smart360 Term Plan you can add benefits and covers like Accidental Death Benefit, Accidental Total & Permanent Disability Benefit (ATPD). Riders like these protect your family from more than one hazard.
5. You Get Built-In Riders
iSelect Smart360 Term Plan is one of those term plans which offer terminal illness insurance cover as a default option with the life cover. Thus, if you face a terminal illness the plan will release the funds to support your treatment costs.
When you buy a term plan, it is for your family and their secured future. You give them financial security by paying a small premium amount. Most people wait for the right age to buy a term plan - first, they wait to get married, then wait for children. There is no right age for term insurance, there is only a right time, and that time is NOW.