Rahul bought his first term insurance plan when he was 28 years old. At that point, he had bought a plan that provided coverage of Rs. 1 crore. It had seemed sufficient because at the time he had no dependents of his own, and it would be enough to cover his financial liabilities.
Now, aged 37 years, Rahul has two doting children of his own and is concerned that the Rs. 1 crore would not be enough to cover all their needs. However, looking at the plethora of options available to him in terms of term insurance plans, Rahul is unsure of the amount he should seek coverage for.
Term insurance plans are essentially a protection plan, geared to providing financial aid towards the policyholder’s family in case of their unexpected demise. Term insurance plans are available for people of all ages. It is also possible to lock in the premium amount to stay the same over the years, resulting in a lump sum payout at the end of the term or upon the policyholder’s demise. Read on below to learn how to opt for the ideal coverage based on individual needs.
Younger people have access to higher cover for cheaper premiums, since they are less likely to contract critical diseases and disorders. That is the reason it is best to get started with term insurance plans when one is younger. Since there are lesser responsibilities at that age, it is best to invest the savings into term insurance plans.
2. Family’s living and lifestyle costs:
The costs of living and the lifestyle maintenance costs of the family are a serious consideration when deciding upon the coverage to be opted for with term insurance plans. Several term insurance plans offer the benefit of income protection as well , which ensures a monthly income to the family in case of the policyholder’s death. This amount has to match up with what the family was previously entitled to in the policyholder’s presence. Thus, it is essential to calculate this amount very carefully to ensure that the family does not suffer financially in case of the policyholder’s unexpected demise.
3. Costs of Children’s Education:
Education costs are huge, and rising by the day, led by inflation. Every parent wants to ensure the best education for their children, which might require a significant corpus. While planning on the amount of coverage required from a term insurance plan, it is important to figure in the amount that would be required to fund children’s education. It is necessary to calculate this systematically, while figuring in the costs of higher education as well. Depending on the age of the children, this figure could vary substantially.
4. Paying off Loans:
Loans often turn into financial liabilities for families of those opting for the loan, especially in case of their unexpected demise. Policyholders can protect their family against this future liability by opting for a term insurance plan. These plans pay off the debts of policyholders in their absence, and ensure lesser worries for their dependents. The family is distraught enough by the policyholder’s death, and it is best to ensure that they have no financial troubles to compound their grief.
5. Choose necessary riders:
Term insurance plans offer riders alongside the main insurance plan which can provide coverage to the policyholder and family for causes aside of death. It is best to opt for riders that seem naturally aligned to the term insurance plan being selected. Riders offer benefits that are separate from the main term insurance plan.
6. Choose suitable premiums:
People can swing between choosing the cheapest premium on offer, and the highest premium which will provide all-round coverage. Neither of these approaches is appropriate since the cheapest premium can leave the policyholder uninsured in a lot of cases. It is essential to choose a plan with a premium that is affordable, based on the policyholder’s income, since an inability to pay the premium and subsequent defaults will result in a lapse of the policy and leave the person completely uninsured.
Term insurance plans need to be chosen with a lot of care, because for a lot of families, it might be a mainstay after the policyholder’s death. This is especially true if the policyholder is also the primary breadwinner in the family. With plans like the Future Generali Flexi Online Term Plan, it is possible to ensure a monthly income for the family along with a lump sum payout at the time of the policyholder’s death. The plan is equipped with benefits like a free look period of 15 days, during which the potential policyholder can scan the terms and conditions of their policy; as well as an Accidental Rider benefit.