Life is full of
uncertainties. You never know what is to come next. You can only be prepared
for them. A term plan insurance will help protect your family if the
unimaginable happens. Buying a term plan insurance will help you live peacefully
while securing your family's future.
Let us look at
term plan insurance and five things you never knew about it in detail.
What is Term Plan Insurance?
In simple words,
term plan Insurance is a legal agreement
between the insurance provider and the policyholder to offer life cover to the
beneficiaries in the event of their demise. The death benefit offers an assured
sum to the nominee filed by the beneficiary while buying a term plan insurance.
Premiums paid for a term plan insurance are paid annually. The assured sum is
thus paid from this plan corpus.
insurance is a form of life insurance that provides the ultimate life cover for
unfortunate events. As you learn more about term plan insurance, you will
realise that it plays a significant role in financial planning, especially in
the long run.
Things You Never Knew About Term Plan Insurance
1. Term Plan Insurance
Coverage: Before buying a term plan insurance, you
must know the amount of coverage you would require for the security of your
family in case of your unfortunate demise. You can use a term life insurance calculator
to find the best coverage. You can perform this simple calculation by following
a few steps mentioned below.
Step 1: Figure out the expenses of your family every month. Then
multiply the figure by 150; the multiplier of 150 will take future inflation
Step 2: Now you must keep in mind your liabilities, such as credit
card bill payments, home loan debts etc.
Step 3: You must subtract your existing flexible assets, such as
fixed deposits, mutual funds or even stocks.
Step 4: Now imagine the next 15 years; how would it look for your
family? Count the expenses for future events such as a wedding or higher
education plans for your children and add that.
Step 5: Add the retirement fund you would like your spouse to have
on their retirement.
2. Term Plan Insurance
Tenure: It is crucial to determine the tenure of
your term insurance plan. The
duration you need it for is important because the tenure should not be too
short; otherwise, the insurance will lapse early. On the other hand, if you opt
for a longer tenure, you would have to pay higher premiums.
To determine the best tenure for you, you will have to calculate the
year by which your stocks, FDs, provident funds, mutual funds, etc., combined
will increase in amount compared to the maturity value of your term plan
insurance. It is said that the year these two figures coincide should be the
year till which you would need life coverage.
Coverage Per Rupee of Premium: After investing in a term plan insurance, you must rest assured. What
is the need to buy one? You buy insurance to live a stress-free life;
therefore, when buying a term plan insurance, you should look for an insurance
provider with a market reputation or companies that are more reliable.
insurance is a hard commitment since it remains valid for long. Hence, it would
help if you chose term plan insurance with affordable premiums and a reliable