Contingency plans are an important yet most underestimated part of any project. If everything goes without an unfortunate event, your contingency savings can be used for other big goals in life. But on the inverse, one hazardous event can tilt the opinions to the other extreme, and then the question may come, “why did we not spend more time and effort on this?”
Your life is also a huge, costly and a long project. It becomes even bigger when you have a family to look after and have children. A life insurance plan makes an important part of an emergency plan. Therefore, to have adequate contingency planning for your family, you have to have a life insurance in place, which will ensure they have enough financial support to continue the journey, if an unfortunate event strikes.
Here’s what your contingency plan should address, and how you can make it strong enough to meet your family’s needs.
What Is A Contingency Plan for Family?
A family’s contingency plan is completely financial and has one single objective – “ensure adequate and timely financial support to the family.” A good contingency plan for a family will help the family sail through most of the financial distress without harming their long-term investments.
For example, in the case of emergency hospitalisation, your income and normal household expenses will be affected. Also, you still need the treatment so that you can quickly get back to your profession and start earning.
In other words, your contingency plan should enable you to resume your normal course of life as soon as possible after a hazardous event. While you should include other things, financial support is the most difficult to achieve in the hour of need.
So, advance preparation helps, and here’s what all you need to include in your contingency plan:
List of Emergencies
When you are planning for emergencies, the first thing to define is how you know it’s an emergency and you need to use the contingency plan. In other words, you need to define the emergency for your contingency plan.
All of these incidents can either cause the family to lose access to a regular income or experience sudden financial burden.
What Will Your Family Need in Emergencies?
You can also take this question as - what should your contingency plan provide at the time of emergency? Although it’s clear that the plan is purely to provide financial assistance, there are a few nuances.
Your family will need 1) A regular income to run the household expenses and 2) A large lump sum to take care of liabilities and future goals, in case of any emergency.
Loss of employment, being a temporary setback, needs a much smaller pool of funds, usually three to six months of your income. However, others need much more funds, which only a good insurance plan can provide.
Using Term Insurance in Your Contingency Plan
Apart from unemployment, and Mediclaim, good online term insurance will help you take care of all the other emergencies listed above. Online term plans like Canara HSBC OBC life’s iSelect Star, can offer everything we have outlined for a great contingency plan.
Here’s a list of things this term insurance plan can offer towards your contingency plan:
Not only these, but the best online term plan should also, keep up with your growing life cover needs. Canara HSBC OBC Life Insurance’s iSelect Star term plan allows you two ways to increase cover without having to buy a new policy every time:
1. Increase the cover at critical moments in life such as marriage and childbirth
2. Automatically growing cover at 5% every year
The first option works best for early adopters, and the second option works best for an existing family whose life cover needs are growing.
Will Your Term Plan Help the Family in the Time of Need?
While all the benefits and features are great, but if your family faces difficulty in receiving those at the time of claim its all only glitter without substance. That is why you need to look for a term plan with claim guarantee conditions.
Claim guarantee conditions will ensure that once your policy qualifies them, your family can receive claim settlement faster. Canara HSBC OBC Life Insurance can settle term insurance claim within a day, for the policies which qualify the claim guarantee conditions.
When it comes to claim settlement, online term insurance plans have a better track record. Almost all insurers promise to settle the claim within 30 days after your policy has completed three years with all premiums paid.
Is Your Contingency Plan Fool-Proof?
Term insurance is anyway a part of your contingency plan. Online term insurance plans which offer these features can help you strengthen your contingency plan further. Also, do not forget to educate your spouse and children on how to use these policies and savings in case of an emergency.
That will make your contingency plan completely fool-proof.