These are unprecedented times and having any and every form of protection makes a big difference. This protection can range from using N-95 masks that provide protection against the airborne Coronavirus pandemic to having financial security in the form of term life insurance. The 2nd wave of the Coronavirus has brought about tremendous amounts of suffering within the country as countless lives have been lost and the Indian economy is suffering with it. Social distancing restrictions imposed as a means of dissipating the threat of the virus have resulted in a sluggish economy. Being financially secured during this time is prudent as the only certainty that governs this unfortunate and difficult time is the lack of a life guarantee pertaining to anyone. Not only have the healthcare expenses increased but being able to avail of quality treatments and getting consultations is difficult now.
What is term insurance and how does it operate?
Term insurance is one of the preferred options to ensure long term security of your family during this time as it allows you to create a layer of financial security for your loved ones. By availing this form of insurance, the insured individual’s beneficiaries/nominees are entitled to a death benefit in the event the insured individual dies within the term they opted for. The sole value of these policies lies in the fact that they provide the insured individuals’ beneficiaries/nominees with a guaranteed death benefit.
How to determine the right term insurance sum assured amount for yourself –
Factors that govern term life premiums are determined by an individual’s age, health, and life expectancy. It is important to select the right term insurance sum assured amount such that your nominee/beneficiary have adequate funds to tide themselves over with it in times of need. Those choosing to buy term plan should consider their medical history, the number of dependents they have, and the premium they are willing to pay. It is wise not to fall into the trap of a low premium as it may end up offering inadequate life coverage. Individuals may seek the aid of a term insurance calculator to understand the approximate premium they would require for availing a term insurance plan.
Individuals must also consider number of years they expect to work and earn a living. Keeping in mind the fact that this form of insurance serves as an income replacement mechanism, they can use the desired retirement age as a factor that guides the sum assured amount they select. Interested buyers of this form of insurance must understand, analyze and highlight monthly expenses such that they are able to gauge what their family tends to spend money on and how much money is used each month. Once there is an understanding of their family’s lifestyle funding requirements, those interested in this insurance will have a better idea of how much they should pay and whether they can increase the amount such that their term insurance benefits can help their family sustain their lifestyle. Knowledge of any recurrent and ongoing expenses ranging from utility bills to school fees is vital here.
Big life plans which can be financially draining ought to be considered as well. Events included under this category range from marriage and retirement to paying tuition fees for higher education overseas.
Investments, savings, and liabilities must be considered and assessed in order to choose an appropriate term insurance sum assured amount. Each of these factors mentioned can help clear doubts pertaining to what the sum assured amount ought to be.