What Makes Term insurance the Perfect Option for Life Cover?

People from various professions are interested in personal finance. No matter who you are, where you come from, and where you want to go, all you want is a financially secured future.

When you think about personal finance, the thoughts regarding life insurance pop in your mind for sure. People do have life insurance, as it is the hallmark of a financially secured future. They don’t understand much about the policies they hold. When asked about insurance policies they hold, all they say in the reply is that they pay an annual premium of Rs. X.

A majority of people have a ULIP (Unit Linked Insurance Plan) or a saving-cum-insurance instrument. In this particular situation, a policyholder paying an annual premium of Rs. 30,000 gets an insurance coverage of Rs. 3 Lakhs only.

You might be wondering if Rs. 3 Lakhs is worth it. Stop your thinking horse right there, as the full explanation is being given here so that there is no room left for doubts. Let us first start with the meaning of insurance. In layman' term, insurance covers (subject to the policy terms) the expenses incurred for fixing the damages to an insured thing. When the insured happens to be a person, then?

Let us suppose that Mr. Gupta earns Rs. 5 Lakhs yearly. He is married to Ria, who is a housewife. They have a daughter. In terms of the rapidly increasing uncertainties in the present times, what will happen to their happy family if Mr. Gupta falls prey to any unfortunate mishap?

His family will lose him as well as the financial safety provided by his salary. Without any backup, how will Ria be able to manage her household? In this particular situation, if Mr. Gupta had insurance cover of Rs. 3 Lakhs, Ria would have been able to manage things in a better way.

To overcome the financial crunch, for starters Mr. Gupta should have purchased insurance coverage equal to his yearly earnings until his family has an alternate income source. Let us assume that Ria makes an investment of the insurance amount in an FD (fixed-deposit) that would earn an annual interest of 8 percent. Mr. Gupta should have purchased a minimum coverage of Rs. 60 Lakhs. Then the 8 percent interest would result in a yearly income worth Rs. 4.8 Lakhs for his wife and daughter.

A term insurance is a perfect way to provide financial safety and security to your beloved family. It helps in providing life coverage at reduced premium rates, tax deductions, flexibility, and ease to comprehend. Long story short, it is an ideal, inexpensive, and easy method to ensure the financial security of your family. 

If you still have doubts regarding your eligibility for term insurance, then think why do a large number of people purchase ULIP instrument in the first place? It has been years that life insurance is considered as a perfect long-term savings instrument in India. It is significant to save money for your retirement, children education etc. In case anything goes wrong, you are backed by the term insurance. The financial safety of your family would be ensured and keeping you tension-free. So, it is recommended by insurance experts to buy term insurance first and then opt for various insurance products.

Be informed first, and then buy insurance coverage, as an uninformed purchase can leave you with insufficient coverage. You know what is worse than having no insurance? It is insufficient insurance coverage. Before buying any term plan, go through a plethora of plans; don’t just make a selection in between the first few plans you come across. Thanks to the web aggregators, as you can easily compare any buy one of the best insurance plans hassle-free. The coverage provided by the term insurance plans should be adequate enough to duplicate your yearly earnings. So that your family is well-insured and financially safe till the time it has an alternate income source.

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