Are you considering securing your family financially in case something unfortunate happens to you? Buying term insurance is an affordable way to support your loved ones without blowing your budget. It offers pure protection for a policy tenure you select. If you pass away within this tenure, your chosen beneficiaries will receive the sum assured.
Let’s read this article to understand various aspects that make term insurance affordable and how much coverage you may need.
What Makes Term Insurance Affordable?
Term insurance is a pure protection policy that covers the risk of death. Depending on your insurance needs, you can select the life coverage duration—10, 20, or 30 years. Term insurance has no investment component, making it more affordable than other life insurance policies with cash-value components, such as whole life insurance.
Let’s look at some of the key features which make term plans affordable:
Limited Policy Term: You pay premiums only for the term (duration) you choose, such as 30 years, after which the policy expires. This is unlike whole life insurance plans, which require premiums to be paid lifelong. This makes term insurance affordable.
Large Sum Assured: Term plans provide high coverage, such as ₹1 crore or more, even at reasonable premium rates. This ensures your family gets maximum financial protection. Find the cheapest term insurance.
Premium Stays Flat: Your yearly premium payments do not increase mid-way and remain unchanged throughout the plan term. Also, if you buy a term plan early in life, the premiums are even lower, as the costs increase as you age.
Who Should Buy Term Insurance?
Term insurance is suitable for anyone who wants to protect their family financially after their death, but it is especially important for:
- The primary breadwinner of the family
- People with major financial obligations such as home loans and car loans.
- Those with dependent family members such as children, elderly parents and others.
- Business owners seeking to protect their business after death.
How Much Term Insurance Do You Need?
People are generally confused about how much term coverage they should take. Here is a simple rule to decide the ideal term insurance amount for your family:
- Go with a term plan with a sum assured of 15 to 20 times your current yearly income. For example, if your income is ₹15 lakhs per year now, opt for coverage of ₹2-3 crores. This amount will financially secure your family if you are not around. The payout can cover their living costs and major expenses for many years without compromising their lifestyle.
- When deciding the amount, check if you already have life coverage from your employer or group policy. That sum can also support your family. So factor that in when purchasing a new term plan. For instance, if you have ₹50 lakh coverage already, you may need to buy just ₹1.5-2 crore more.
- Following this 15-20 times annual income rule ensures your family has enough money to maintain their current standard of living if you pass away unexpectedly. Customise the amount from time to time based on existing covers and your family’s unique needs.
Conclusion
Term insurance is an affordable way of ensuring your family is financially protected in your absence. Term plans focus on covering the risk of death during the policy term you choose and avoid expensive investment components that make other policies costly. This enables them to provide high insurance coverage at reasonable premiums. Opting for longer policy terms, buying at a younger age, and avoiding unnecessary riders further keeps term plan budgets friendly. So, rather than worrying about expensive insurance, recognise the ability of term plans to secure your loved ones’ future at pocket-friendly costs.
