Why term insurance is important at every stage of life

When Swati was 26 years old, she bought a term insurance plan. She was unmarried and on the gateway of a successful career. So, she opted for a small life insurance cover of Rs 30 lakh. She then got married at the age of 29 and soon after, had a baby boy. Evaluating her cover basis the needs of her family, Swati revisited her policy that fortunately had a special feature where the sum assured could be topped-up at various life stages. Presently, at the age of 31, her sum assured in Rs 85 lakh. She is assured that her son has adequate financial safety in case of sudden misfortune.

Changing insurance with progressing life situations

It is a well iterated fact that term insurance secures the future of your loved ones in case of your untimely demise. However, most people don’t realise that life insurance plans should be remodelled with evolving life situations. A sum adequate for a young and unmarried person is different from someone with a spouse and children. Similarly, a new parent does not assess the additional security they will need in their old age. Which brings us to the crux of the idea - whatever life stage you are on, buy a term insurance if you haven’t already. And here is a case for the argument:

You’re starting to get addicted to paychecks

You are young, in your prime health, landed your first job, and the thought of death is improper. But look at the bright side - you have limited liabilities and so you can work toward accumulating a sum adequate to cover responsibilities such as an education loan or a retirement fund for your ageing parents. And of course, saving some tax never hurt anyone. Buying a term insurance policy at this stage will yield large cover at an affordable premium. In fact, you could look for a company that locks a low premium for the entire policy duration and doesn’t increase it with your age, ensuring maximum savings for you. It is possible to get term insurance of up to Rs 1 Cr at a premium of a few hundred rupees per month. You could also add a critical illness cover to the base policy for better financial stability in case of an unexpected illness. Additionally, there are riders like the accidental death benefit and a provision to reduce your taxable income under the section 80C and 80D.

You have just pledged your troth

Newly married people have all the right to enjoy the new milestone of their life to the fullest. Starting a new life with a loved one and making investments like buying a new house or a car are desires and responsibilities that may require you to take loans. With such increased liabilities, it is imperative for you to ensure that no financial baggage is left behind by you for the ones who will anyway be marred by an emotional turmoil, in case of a calamity. A term insurance policy bought under MWP Act ensures that the sum assured is indeed passed on to your wife and children of the male policyholder. This helps in protecting your family's financial interests in your absence because no one else can claim the sum assured even if you owe them money. Another thought that troubles most newly weds is the prospect of getting a terminal illness and leaving the spouse in emotional and financial menace. As soon as you get started with your married life, do look at updating your policy for adequate sum assured and 100% terminal illness payout benefit.

Your dream home is not a dream anymore

Owning a home automatically brings a lot of financial stability but a home loan brings in monetary burden. It will be such an irony if something meant to shelter you, exposes your loved ones to accountability after you’re gone. But there’s a legit way to ward the situation off - buy a term insurance which has flexible payout options in the form of lump sum, monthly, or a versatile combination of the two. This will allow your family to use the payout in any way they choose to settle the remaining home loan or any other financial liability that they might face in your absence. A decent term plan also has permanent disability benefit, so do your research and buy the one that ticks all the right boxes.

You’ve been blessed with a baby

The joy of becoming a parent can be compared to nothing, they say. But the bigger joy is to know that you’ve safeguarded your bundle of joy’s future and that they’ll never have to depend on anyone for their financial needs. From a splendid lifestyle to the best of education - you want the finest of everything for them and that calls for conscious investments on your part. Your sole aim to ensure that your children continue to live their dream lives even if you are not around. The claim amount can be used for higher education of the child and getting covered for a long period (99 years) will enable you to leave a legacy for your child. This means that you’ll have to evaluate in advance the cost of living and expenditures that they’ll face once they grow up. Basis this pre-evaluation, you must buy a term cover that will keep up with changing and demanding financial situations.

If this thought has sent you to a worry trip, here’s a calculator to tally your term insurance premium basis the sum assured should go for determined by the life stage you are at. You won’t even need to leave your seat as the best plans are available online - at the convenience of a few clicks.

Source: The Times of India