Personal Finance

Importance of Term Insurance Plan is well know to us. Many have already opted, others are evaluating, most are still thinking what to do. This is the irony of most Indians while selecting insurance plans. There is nothing wrong, in spite of digital era financial information and decision making still remains rocket since for most common man.

Look at the below few points while selecting your term plan.

Policy Period  – Term plan come into the rescue of your family financial needs when you are not there, it takes care of your remaining EMIs,  provides money for the remaining work which you planned but could not complete. So while selecting policy term, look for tenure where in your absence your family and their financial needs will benefit the most from the repayment from the term plan.  For example an average person will need more money between age group of 35-55 as liabilities will be maximum during this period. EMIs, kids education, holidays spend, other family members liability is most during this time. But after 50-55, everyone will have their kids already educated or settled, EMIs paid off or a few installments pending and moreover at this age you must have accumulated savings /corpus which in case of your absence will take care of your family. Most people choose term plan till 60-70 years of age but that’s not needed. Term plan is for protecting and financially supporting when you are not there and not making money from your death. As you chose longer tenure of term plan, premium unnecessarily goes up, so select tenure which is idea for your needs.

Policy Cover – How much cover you want from your term plan when you are not there to support family financially ? Look at your family’s monthly expenses, your present annual income, present and future liabilities as few benchmarks to arrive at the cover that will be perfect for your needs. Policy cover is to provide money for cash flows to meet your family expenses, liabilities and provide savings so that family is comfortable in managing day to day expenses.

Riders – Riders come at last for adding wings to your term plan. These come to effect in certain conditions such as partial disability, critical health conditions etc. Consider these two riders :

• Critical Illness – this will help you with additional payment from the insurance company in case of diagnose with certain illness and will also keep protection on.
• Waiver of Premiums – this rider will allow you to keep term cover intact and not worry about premiums in case of your partial/permanent disability or lose your job.

Hope with these fine points you can select the best suitable option for your term plan.