Unveiling Falsehoods About 8-Year Term Life Insurance Policies
In today's world, it's crucial to secure your family's future, and one of the most effective ways to do this is by investing in a term life insurance policy. Despite being covered under group life insurance provided by your employer, it's always wise to get a term life insurance policy of your own.
Term life insurance offers a much higher sum assured in case of the policyholder's untimely death, for a similar premium amount compared to traditional policies like ULIP, endowment policy, or money back policy, which typically provide coverage of only 10% of their yearly premium amount.
One may question, "What amount of term life insurance coverage is appropriate for a family?" The answer lies in considering key factors such as income replacement, outstanding debts, mortgage balance, future education expenses, final expenses and funeral costs, lifestyle and standard of living, years until retirement, number and ages of dependents, and retirement corpus (if married).
These factors are often combined in formulas like the DIME method (Debt, Income, Mortgage, Education) to estimate a comprehensive coverage amount that reflects your family's present debts, ongoing income needs, and future obligations. The aim is to balance adequate protection for your family with what you can afford to pay in premiums, aligning with your overall financial plan.
Term life insurance is not just for married individuals or those with children; it can also provide financial security for single individuals with debts or dependent parents. In fact, with term life insurance plans being available online, buying a term life insurance plan is a matter of a few clicks.
It's essential to dispel common misconceptions around term life insurance, such as it's a waste of money, I am single or too old, etc. Remember, getting a term life insurance policy today will ensure that your family will not have to go through financial hardship if you are not there.
For instance, on buying one of these plans, for a yearly premium amount of Rs 20,000, the coverage amount would be Rs 2 lakh. While Rs 1 crore is a commonly marketed amount for term life insurance coverage, it's not calculated in a scientific manner. To calculate term insurance coverage, one should account for monthly expenses, liabilities, important goals and life events, retirement corpus (if married), and deduct any existing wealth.
Today, term insurance plans offered by any insurance companies can be customised as per your needs. At ETMONEY, a term life insurance cover of Rs 1 crore comes at a yearly cost of only Rs 10,000 to 17,000. Term life insurance is the most simple and essential life insurance product, and contrary to popular belief, the choices and options are too many today in term life insurance plans.
In conclusion, securing your family's financial future is within your reach with term life insurance. By understanding the key factors to consider when calculating coverage and debunking common misconceptions, you can make an informed decision and ensure peace of mind for yourself and your loved ones.
In personal-finance, term life insurance offers a significant financial coverage that can help secure a family's future, providing a higher sum assured compared to other finance products like mutual funds, for a relatively lower premium amount.It's essential to balance adequate term life insurance coverage with what one can afford to pay in premiums, taking into account factors such as income replacement, outstanding debts, and future obligations, as well as customizing the plan to meet individual needs.
