Term Insurance Plan l An Essential Step in Financial Planning

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Financial planning creates a roadmap for managing your financial resources to achieve your long-term goals. It entails developing a thorough, personalized plan that considers every element of your financial status, including your income, expenses, assets, liabilities, insurance coverage, and investment portfolio.

Whether you are saving for retirement, buying a home, or paying for your children’s education, effective financial planning is essential to ensure you have the resources you need to achieve your financial goals.

While it is possible to manage your family’s finances today, doing the same in the face of adversities such as death is impossible. Your family can get impacted both emotionally and financially. If you cannot help your family emotionally, you can help them financially by buying a full–suite term insurance plan.

Continue reading to learn more about what is term insurance plan, how it is helpful, and why you should get it.

What is a Term Insurance Plan?

It offers coverage for a predetermined period. The beneficiaries get the death benefit, which is the sum due in the event of the policyholder’s demise. No monetary gifts or the sum are given if the insured survives the period.

An individual can purchase coverage under a term insurance plan or term cover by making a premium payment. The nominees or surviving family members will be compensated with a death benefit payment.

In the face of the COVID-19 pandemic’s unpredictability and financial burden, it is even more crucial to ensure that your family will be taken care of, no matter what the future holds. You can do this by using a term insurance plan. Term insurance plans guarantee a pay-outwithin the parameters that IRDAI governs.

Features of a Term Insurance Plan

Uncertainty is the only certainty in life. Possibilities of sudden death, accidents, disabilities, and diseases always exist, even if we do not like overthinking them. Therefore, avail a significant term insurance plan that will help your family financially. Below are listed a few features of a term insurance plan.

1. Death Benefit: The primary feature of term insurance is the death benefit, which is paid out to the beneficiaries in the event of the policyholder’s death during the policy term.
2. Term Length: Term insurance policies have a specific term length, usually ranging from 1 to 30 years, during which coverage is provided.
3. Premiums: Term insurance premiums are typically lower than permanent life insurance policies.
4. Affordability and Flexibility: A term insurance plan is the most affordable life insurance option, with lower premiums than other types of policies. It also offers a range of terms to choose from, allowing policyholders to select the coverage period that best meets their needs.
5. Conversion Option: Some term insurance policies allow the policyholder to convert their term coverage to a permanent life insurance policy. This option is typically available for a limited time and may require an additional premium payment.

What is the Need for a Term insurancePlan?

It is natural to ask what the need is for a term insurance plan. So, here is the answer to your question:

1. Financial Protection: Term insurance provides a lump sum payment in the event of the policyholder’s death, ensuring that their dependents are financially secure.

2. Debt Coverage: Term insurance can help pay off outstanding debts, such as mortgages or personal loans, reducing the burden on surviving family members.
3. Income Replacement: If the policyholder were the primary income earner for their family, term insurance could help replace lost income, allowing their dependents to maintain their standard of living.
4. Estate Planning: Term insurance can help ensure that the policyholder’s assets are distributed according to their wishes, avoiding potential conflicts among their beneficiaries.
5. Peace of Mind: You can be more relaxed and live a happy life without worrying about the future if you know that your family will be monetarily taken care of if something ever happens to you.

Things to Consider Before Buying a Term Insurance Plan

Below are listed a few points that must be kept in mind before buying a term insurance plan: 

1. Coverage Amount: Determine the amount of coverage you need based on your financial obligations, such as mortgages, debts, and future expenses for your dependents.
2. Term length: Choose a term that best meets your needs and budget, considering the timeline of your financial obligations and your expected retirement age.
3. Premiums: Consider the cost of premiums, initially and over the policy’s life, and choose a policy that fits your budget.
4. Insurance Company‘s Reputation: Research the financial stability and importance of the company you are considering and choose the one with a strong history of paying claims.
5. Policy Riders: Consider adding policy riders, such as accidental death and dismemberment coverage, to provide additional financial protection for your beneficiaries. Make sure to carefully review the terms and conditions of any riders before adding them to your policy.

Conclusion

By now, you must be clear about what is term insurance plan and its benefits. A term insurance plan is crucial to any comprehensive financial planning strategy. It provides much-needed financial security to loved ones in case of the policyholder’s untimely death, ensuring they are not burdened with debt or living expenses. Furthermore, term insurance plans are affordable, making them accessible to a broader range of people.

 

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