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Future Generali Cancer Protect Plan

7 Reasons Even the Wealthy Need to Buy Term Insurance Plans

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myths about investing in ulip plans

A lot of people have the myth that term insurance plans are only for the poor and middle-class and not the “Rich”.Sure, the wealthy have a lot of savings and have a high income and when they hear the words “term insurance,” they often ignore it, procrastinating its purchase, considering them to be sufficiently financially independent. But, unfortunate situations do not announce their arrival and term insurance has many more benefits than just providing a lump sum payout to the family after the demise of the policyholder. Moreover, term insurance can fill in some unexpected gaps that may open as a result of the policy holder’s premature demise.

So, here are few points highlighting the reasons why even the wealthy need to buy term insurance plans:


  • Providing Liquidity to Your Family
     

    When you pass away, all your assets may not be easily or quickly transferred into cash. This holds true for your lavish bungalow or other investments that you own. Term insurance enables surviving members to cover costs associated with your death, as it may take time to liquidate your investments or turn assets into cash.

  • Preserving Family Assets

    Many wealthy individuals are ‘Asset Rich’ but ‘Liquid Poor’. However, term insurance plans become a quick tool to create liquidity when a key person in the family passes away, ensuring that hard-earned assets,including, a vacation property, business interests, or a family home are not liquidated, especially under unfavourable conditions, to pay for liabilities, fees or taxes.

  • For Estate Plan Creation

    Life insurance, including term insurance, has a unique ability to create immediate funds for your nominees after your demise. Moreover, it allows money to be passed directly to your designated nominee, bypassing the complications created by probate. Probate, in simple terms, is official proving of the ‘Will’. Besides, the term insurance benefits are tax-exempt and stay untouched by potential debts

  • Repaying Outstanding Debt Obligations

    You may have enormous net worth, but if you also have a significant amount of debt, your net worth can disappear quickly, in your absence. However, the payout received in the form of death benefit can help your family pay the debt without putting any financial strain on them.

  • To Equalize an Estate

    Some assets might be better left to a specific heir, or heirs, as opposed to being shared by every one of them. For instance, if you leave an apartment worth Rs 2 Crore to one child and have Rs 1 Crore of investments to leave to another, you could buy term insurance of Rs 1 Crore to top-up the inheritance for the second child so that both inherit equally.

  • For Charitable Bequests

    JYou can make a more substantial gift to charity by investing in a term insurance plan to fund a gift upon your death.You can do this in different ways- you can either have the charity purchase a term plan on your life while you donate the cash annually to pay its premiums or, you can donate an existing term plan to the charity and continue to pay the premiums on behalf of the charity.

  • Premium Paid Is Worth the Peace of Mind

    If you are financially independent, the monthly or annual premiums aren’t as big of a deal as they would be for somebody who isn’t. Therefore, it’s easier for you to afford term insurance plans to provide greater security for your family.

Finally:

Regardless of whether you consider yourself self-insured, because of substantial financial networth, you should still want to have an adequate amount of term insurance to ensure that all that is present in your estate will in fact pass to your heirs. Having no insurance at all implies that they will receive only a reduced amount of your assets after your demise.

Secure your family’s financial future @ Rs.20* per day with Future Generali Flexi Online Term Plan! Get a Quote

*Premium for 30 year old, Non Smoker Male. Policy Term: 30 years for Basic Life Cover option inclusive of Goods & Services Tax. UIN 133N058V03
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