The changing lifestyle is witnessing new and different kinds of health concerns. While some are manageable, some of them have fatal consequences. For such times you must plan for these unpredictable situations. A loss of a family member can not only be mentally devastating but can also lead to grave financial stress.
Being prepared for such times is essential. One such investment tool that can help you plan is using a term insurance plan.
Term insurance meaningthe one that provides a life cover for a specified duration. It is an affordable insurance plan that provides death risk cover for a predefined duration. High coverage at low premiums is the highlight feature of term insurance. The nominee receives the death benefit in case the insured person dies during the policy term. It can be either paid in the form of monthly payouts and lump-sum amounts.
Initially, term insurance plans in India did not offer payouts if the insured person outlives the policy term. However, some companies have started to provide Term Plans with Return of Premiums that payback all the paid premium if the insured survives the term.
Here are a few reasons why one hesitates to invest in term plans –
Insurance is assumed to be expensive.
Misconceptions float in the millennial generation that insurance is expensive. Whereas, the truth lies that it is an extremely affordable option to buy term insurance plans. The primary reason for such an assumption is the lack of understanding about insurance products. Most individuals who buy term insurance are not aware of its sum assured to their policy. A term policy is one of the least expensive insurance plans that one can buy. The broad cover offered by a term plan is far more than the premium charged for it. As a rule of thumb, one must opt for a sum insured up to ten or twelve times their annual income. Moreover, availing a term plan at an early stage in life will be more economical. Your life expectancy is directly equated to the premium charged for it.
Risk-averse nature of investments
Most individuals prefer to be risk-averse in terms of their money. It can be either a conservative approach or a way to retain most of their income. This way, one can use these funds for recreation. The returns from investments are equated to returns from life insurance products. The lack of long-range plans is one of the deterrents in buying insurance covers. During unfortunate times, an insurance cover will help you restore financial stability.
Term insurance plans are an inexpensive way to offer protection to your dear ones. Under a term plan, insurance companies provide financial cover for the duration of the policy. In case the policyholder outlives the tenure, there is no maturity benefit.
Placing insurance at the bottom of investment priorities
The new age prioritization for insurance products makes it a less sought alternative. While the adage, health is wealth, is rightly understood, people are not able to connect the dots. Leading a healthy lifestyle does not imply that insurance can be ignored. An unforeseen event can set back your family. So availing the right term insurance is important for a well-planned future. Also, a term plan is one of the cheapest ways in which you can ensure all-round financial protection for your loved ones. To ensure your family does not feel financially devastated in such torrid times, one can opt for a term plan to protect their future.
Goals-based investment approach
New age individuals prefer to invest their hard-earned money only for specific goals, for example, buying a house, or a car, etc. Investing while keeping a fixed goal in mind is essential, it is also vital to not defer purchasing an insurance cover only after reaching milestones like marriage or childbirth. The earlier you start, the lower are its premiums. While the nominees can be changed as you progress, it is crucial to get started.
Now that you are aware of the various reasons that term insurance is beneficial, you can change your approach towards it. Check for the different term insurance plans available and do not hesitate to invest in a suitable plan for yourself.