When the thought of “financial planning” comes to our minds, we usually think of the big things. We picture buying a nice house, going on a luxury resort vacation, or having a large retirement fund. These are like the fancy rooms in a house. But you can’t just build rooms without a floor, can you? “Floor” is what we call the foundation.
In India, that foundation is life insurance, especially a plan called Term Insurance.
Contents
- 1 What Exactly is Term Insurance?
- 2 Why is it the “Foundation”?
- 3 5 Simple Reasons Every Indian Family Should Have Term Insurance
- 4 1. Get Big Protection with Very Low Premium
- 5 2. Your Loans Get Cleared
- 6 3. It Ensures Your Child’s Future
- 7 4. A Sense of Security
- 8 5. Tax Benefits
- 9 How Much Cover Do You Really Need?
- 10 How to Initiate: By Using Term Insurance Premium Calculator
- 11 Conclusion
What Exactly is Term Insurance?
Think of term insurance as a safety net. In fact, it is the most straightforward type of protection you can get. You pay a relatively small sum (called a premium) to an insurance company for a fixed term. On your side, if you die during that term, they pay a large sum to your family.
Nothing fancy like investment features. No promises of doubling the money. Just one thing, and that too very well: ensuring your family is financially secure even in your absence.
Why is it the “Foundation”?
Suppose you want to create a very high tower with blocks. And every block is a dream: the child’s education, the spouse’s well-being, or the home loan clearing. The tower, however, can fall if the bottommost block is very fragile.
Term insurance is that very bottommost block. When the family’s breadwinner dies, the income stops. But the bills do not stop. Even paying school fees, buying groceries, and paying rent must continue. Term insurance offers a huge “lump sum” amount, which is like a substitute for lost income.
5 Simple Reasons Every Indian Family Should Have Term Insurance
1. Get Big Protection with Very Low Premium
Term insurance can be very economical. Since it is only a protection plan without any element of “savings” in it, the price comes out to be quite low. For a nominal amount, it is possible to get a cover of ₹1 Crore. It might even be less than what you spend on a one-time dinner or a couple of movie tickets.
2. Your Loans Get Cleared
We all have loans, mainly a car or house loan. These are considered “good” debts since they facilitate our growth. But what if the borrower dies? The lender will be uncompromising in their demand for money. Without insurance, the sole earner of the family may be forced to sell the house in order to repay the loan. A term insurance plan allows your family to repay each and every rupee and also continue to stay under one roof.
3. It Ensures Your Child’s Future
Every Indian parent wishes the best for their child in terms of education. However, the cost of education is increasing annually. Term insurance, in such a scenario, acts as a safeguard for your child’s future. They will be able to achieve their career dreams, like doctor, engineer, or artist, without any hindrance. In fact, the child’s education will not be compromised.
4. A Sense of Security
Worrying about the “What ifs” is a very specific kind of stress. Term insurance helps in minimizing such stress. When you have a policy, you feel very sure that your parents, your wife, and your children are taken care of. This kind of assurance allows you to give your all in work and live your life to the fullest.
5. Tax Benefits
The Indian government strongly supports people who make efforts to secure themselves. Hence, there is a provision to reduce your taxes if you pay for a policy. Both ways, it works out to be beneficial.
How Much Cover Do You Really Need?
One of the queries that most often comes up is “How much coverage should I get?” One quick-and-easy way to look at this is to get an amount of cover that is 10 to 15 times your annual income.
So in case your annual income is ₹10 Lakh, you ought to go for a cover of at least ₹1 Crore to ₹1.5 Crore. This way, the amount kept in a bank, the interest generated, would be sufficient for the family to carry on with their regular life for quite some time.
How to Initiate: By Using Term Insurance Premium Calculator
Quite a few individuals refrain from purchasing insurance merely because they find the paperwork or calculating the premium too complicated. However, nowadays, it is even easier than ordering food online.
The best guide to beginning the process is to get a term insurance premium calculator. This is a complementary tool offered by the majority of insurance companies. You only have to provide a few pieces of information:
- Your age
- Whether you smoke
- How much cover you want
- How long you want the policy to last
The term insurance premium calculator will instantly give you the exact amount that you need to pay. It will also be of considerable assistance in working out the pros and cons of different plans, helping you to zero in on the one that perfectly matches your monthly budget.
Pro Tip: The sooner you buy term insurance, the better it is for you and your pocket. Your premiums will be significantly lower if you purchase the policy at the age of 25 rather than at 40. Also, once the policy is purchased, the premium remains unchanged throughout policy term!
Conclusion
Financial planning can be so confusing that it feels like you are lost in a maze with lots of turns. You will be told about mutual funds, stocks, gold, and property. All of those matter, but deciding on them only happens after your own safety is assured. Don’t put off starting because you want the “perfect time.” If only you had started yesterday; not to worry, today is also a good day. Have a chat with your family, use a calculator to estimate prices, and get a policy that safeguards those you care about.
Literally, life insurance is not about what you can get; it’s about love and responsibility for the people who matter the most in your life. By picking term insurance, you are essentially saying to your family: “I will always be there for you.”
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