Insurance in today’s day and age is an investment not to be skipped. Nothing provides security to your dependents like a life insurance policy’s financial coverage. Various life insurance plans are available in the market. Selecting a suitable plan requires you to be informed of your requirements and only then buy one.
What is a term plan?
Among the different types of insurance covers, term insurance is the one that offers insurance coverage in its purest form. The entire premium paid is attributed to protecting the policyholder’s life. In the event of an unfortunate demise, the sum assured is then delivered to the nominees. However, in the event the policyholder outlives the policy tenure of a term insurance policy, no maturity proceeds are paid.
The sole purpose of a term insurance plan is to provide life insurance coverage. Investment is not an objective of a term insurance policy, unlike other life insurance plans that offer a combination of investment and insurance. Since a term policy has limited coverage for the policyholder’s life, the premiums are priced lower when compared to endowment plans or money-back plans. Thus, term policies offer a range of up to a crore by paying a few thousand in premiums.
Since these term policies do not have any maturity proceeds, many young buyers, especially unmarried individuals, avoid buying one. Further, young working couples also refrain from buying a term plan because they do not need life insurance cover since they are young and healthy and have a steady income source.
Should youngsters who aren’t dependent on their parents consider buying a term insurance policy?
Youngsters must consider buying life insurance coverage as the first step to a robust financial plan. When purchasing a life insurance policy, your future financial needs are a critical aspect to keep in mind. When choosing a specific program, the coverage must be commensurate with your age and income. Thus, understanding your requirements from a term insurance policy helps in the long run.
Further, as age increases, it is also possible that your parents may become financially dependent on you. Considering these situations, a term insurance policy is a smart choice, even if independent of parents.
As the future is unpredictable, it is best for youngsters, dependent or independent of their parents, to buy a term insurance plan early on in their life. Many buyers purchase a term policy later in life, after a major life event like childbirth or marriage, only to realize that the premiums increase with age. Hence, buying a term plan early in life helps to keep the tips within budget. To decide which policy to choose, a term plan calculator is a nifty tool made available by insurance companies for free.
Is it good to put off buying a term plan for couples when both partners are earning?
In the modern world, many couples have both partners as working professionals. Considering the increasing cost of living, family needs, and future financial goals like a child’s education, marriage, etc., one partner’s income may not be sufficient in an uncertain future. Thus, it is best to choose a term insurance plan that provides well-rounded financial coverage to ensure financial stability and security for the dependents.
How to decide upon the right term insurance policy for you?
Before you shortlist any term insurance plan, understand what a term plan is and its benefits. Once you have understood the basics of a term plan, you can choose a policy that suits your financial needs. Choosing a policy with the longest term or highest coverage may not be the best approach. The choice must be based on your life goals, for which you need to create a safety net. Strategically selecting the right term plan will help to offer protection at different life stages based on changing requirements.
A term plan with the option to increase coverage is a smart bet for someone who has just started earning. As responsibilities increase with time, financial needs also go up. A term plan with increasing coverage will help to protect these growing financial needs. While there are several plans to choose from, a term plan calculator will aid in helping you compare several plans to shortlist a suitable insurance cover.
To conclude, youngsters and working couples must consider buying a term insurance policy early in life for the benefits mentioned above based on their different life stages.