Wednesday, 4 January 2017

5 reasons to buy a term plan today

In times of financial uncertainty, it is often the steps we take today that can have an impact on the future. Too often we fail to correctly estimate how much money will be needed for future financial goals. Inflation and rising expenses eat into our monthly income steadily.

At the same time, we often fail to factor in one grim fact – we are able to support our families only as long as we are present with them. If we are not, our loved ones may face severe financial difficulties. The best way to remedy this situation is by buying a term insurance plan.

Consider the following reasons to buy a term plan:

  1. It is affordable. Term insurance policies are among the most affordable insurance products in India today. This is because the premium payable is quite low. Hence, it is an ideal insurance product for those who do not wish to invest in expensive life insurance policies, but who would like to have sufficient life coverage for their loved ones’ future.

  2. High sum assured. Though the premium on the term plan is quite low, the corresponding sum assured is not. In fact, term plans have some of the highest sum assured amounts across life insurance products in India. This large sum of money can be useful to your loved ones in your absence – many of their personal milestones can be achieved using this money.

  3. Flexibility. Reputed insurance companies in India are offering flexibility in term plans. Apart from simple pure life insurance policies, they are offering different pay-out options and the chance to change the plan matrices if necessary. This was not possible earlier, when only simple term insurance was offered with a lump sum payout.

  4. Low possibility of claim rejection. As per a new mandate from the IRDA (Insurance Regulatory Development Authority), insurance providers cannot penalise the policy holder on grounds of non-disclosure of facts two years after the policy becomes active. However, you must take care to furnish all the correct and latest information about yourself at the time of taking the term plan. This mandate means that future claims made on your policy will likely not be rejected, if your information is correct.

  5. Best way to pay for the future. You may have created savings and made investments for the future. However, in times of high living costs and mounting expenses, these may not last for more than a few months. Realistically, it may not be possible for you to create a savings or investment fund to the tune of crores of Rupees. However, your term plan money can be upwards of Rs 1 crore. Hence, term insurance will hold your family in better stead.

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