Why Term insurance is a must to do – importance of term insurance in your life

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Term insurance plan is one of the categories of life insurance plan. Life insurance is one of the most important investments that we all have to do in today’s life. By the term life insurance we can understand which can secure our family’s financial condition after your absence as well. Means in case you die then someone should be there to take care of your family’s financial targets and every life expenses. In this article we will talk more on the importance of a term insurance plan in your life.

importance-of-term-insurance-plan

What is a term insurance plan?

Generally a term insurance plan is a scheme where financial benefit can be availed only if the insurer is dead. His or her family will get the corpus amount if policy holder dies in the policy period. But if insurer survived till policy term end then policy holder will not get anything. So the sole aim of a term plan is to secure your family’s financial supply in case you die.

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Benefits of a term insurance plan

let’s discover few very basic benefits of a term plan over other insurance plans

  • For a fix sum assured amount one has to pay a very less premium which is even negligible and the life cover can be very high. To understand this point clearly you can check out the LIC E-Term online term plan premium rates and the life cover you will get.
  • If you understood the first point, then another meaning of the first point is one can go for a higher sum assured amount that you can’t even imagine? E.g. you can easily buy a 1 crore term insurance plan by paying hardly 15,000 max premiums yearly. In case you die your family will get 1 crore which might be enough to plan their future without your presence.
  • Term insurance can be chosen in a wide range of terms like – 10, 15, 20, or 30 years. You can choose your coverage term as per your choice.
  • One can buy term insurance plan online. Means company doesn’t have to pay any commission to agents and also you can fill your data your own. This is good for you only.
  • Term insurance plans are very simple in nature and will come in picture if you die. The only things you have to remember is carefully and honestly provide the details so that after your death your family can easily process the insurance plan, otherwise you claim may get rejected and your family will be in huge trouble.
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Why people don’t understand a term insurance plan?

You might be reading about the importance of a term insurance plan in many personal finance websites these days. This is necessary to spread the awareness as in our society there is a negative view towards these policies to promote other conventional policies for business. Insurance agents will never ask you buy a term plan rather they will tell you that why to waste the money buying a plan where your money will never come back.

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But if you analyze your own you will realize the benefit and power of a term insurance plan. Let me tell you my example only. I took HDFC Click 2 Protect plan for a sum assured amount of 80 lakhs (30 year term) and premium is 10,000 / year. With that investment I made sure that in case I die in 29th year, my family will get 80 lakhs, which may be a good amount now but may not be after 29 years. Anyway the point is in 29 years I spend only 2,90,000 and my family will get 80 lakh. Do you have an investment plan which can give this much return??? Think about this question. If you could save that amount in any other money back plan how much benefit you would get? We all know that any investment cum insurance plan return only 5% max. So you can calculate the amount your family will get in case you die in this case.

Now if I survive till next 30 years, then I will get nothing. I may lose 3 lakhamounts in that 30 years. But for my family I will be alive and by the time my earning will be more than now. But in the next 30 year I can live peacefully and be tension free when I think about my family’s future plans. But this 80 lakh may not be necessary as per your plan, so that you have to calculate your own how much insurance you should buy.

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So, is term insurance plan a must buy for everyone?

The answer is Yes. Don’t think much about the small amount that you will invest to buy a term plan. Every year you are wasting money for many unnecessary purchases. If you plan properly you can save money from them and pay your term insurance premium. A term insurance can make you tension free and help you to think better way to live you daily life. I hope this article is enough to clear all your negative views for term insurance plans, if not then it seems you don’t care for your family.

8 COMMENTS

  1. I am sanjay ,recently got married , i want to take term insurance for 1cr. I have plan for LIC , HDFC, MAX Life.
    Please suggest me which one is better for me.

    • Hi Sanjay, I think you have to choose as per your need only. I found HDFC best online term plan in India as per my need, so I have bought HDFC Click 2 protect policy.

  2. “We all know that any investment cum insurance plan return only 5% max.”

    5% of the total premium paid at the end of maturity ?

    or

    it gives 5% per year as interest ?

  3. Valid Points and very well written, my confusion is where to buy term insurance from? is it LIC which everyone is saying is stable and has a good settlement ratio or Private like ICICI or HDFC? Private offers a much lower premium vs LIC but i keep reading and hearing that Private the settlement and the process is not simple PLUS if there is a major calamity, in that case HDFC / ICICI wont have the funds to may lacs of people where as LIC can still pay

    • Thanks for liking my effort, Viraj.

      Actually the comparison with LIC is not valid as LIC is in the market from ages and they have the best network across India. In that field other private players are failed to compete. If you see the claim settlement data, you can understand the difference. But in coming days these facts for LIC may change as other players are offering more benefit, return friendly good policies.
      http://www.mydailylifetips.com/lic-best-life-insurance-company-according-to-irda-claim-settlement-ratio-2013-2014/

      So, think on those aspects and take a decision from top 3-4 companies. Rest everything will be fine only. If you provide accurate information, keep your health conditions good then no company can reject your claim, if it require in future in case of unfortunate death.

      And don’t forget to involve your family while buying any insurance plan. Educate them how to handle the situations, how to file a claim in case anything wrong happen in future.

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