Usually, parents invest money in various financial products, such as Public Provident Fund (PPF), bank fixed deposits, mutual funds, and Unit-Linked Insurance Plans (ULIPs), to ensure the financial security of their kids. Life is uncertain, and an unfortunate event with you can derail the path of your investments. Besides this, it can hamper the course of your investments. So, it can be difficult for your family to achieve their long-term goals.
If you are a father and the only earning family member, and an untoward incident leads to your absence, the life goal of providing your children with top-quality education may not come true. Additionally, the wish of sponsoring grand wedding-related ceremonies for your kids may not be fulfilled if you are not there. However, you can prevent putting the dreams of your family in jeopardy by investing in a term insurance policy. If you want to seek knowledge about what is term plan, and how it can ensure your family’s economic stability, read on.
A term plan is a pure life insurance policy that provides life cover to the policyholder for a specific duration. A big plus point of investing in a term life insurance policy is that it offers an enormous sum assured at an affordable premium. It acts as an income replacement tool for your wife and kids when you are not there to take care of their monetary requirements and goals. So, with this plan, you can provide for your family even during your absence.
Why you should invest in term insurance
You need to invest in term life insurance because it can:
- Help to manage your children’s goals efficiently
A term plan plays a crucial role in ensuring that your children do not face any hurdles in transforming their dreams into reality if you are not there with them. For instance, your children’s ambition to study abroad or your aspiration of having a grand wedding celebration for your son or daughter may face a hindrance if you have not done effective investment-planning for unexpected eventualities. In case something unfortunate results in your untimely absence, the sum assured that your family members receive from the insurer can help them achieve your children’s life goals.
- Ensure your family’s financial security
Many people refrain from investing in term plans because they think that their premium may go waste if they outlive the policy tenure. While investing in term insurance, you are preparing yourself and your loved ones for the uncertainties of life. So, do not consider it a liability. If you are uninsured, your family may have to face financial hardships. A term insurance plan can shield their economic well-being. Your dear ones can utilize the money to meet their daily expenses as well as fulfill your children’s life objectives in the long run.
Where can you purchase a term plan?
You can buy a term plan through the traditional route via an insurance agent or online. It is quite convenient to purchase it online. Through this mode, you get a term plan at a cheaper rate, as the insurer eliminates the agent’s commission and passes on this advantage to you. Moreover, while buying online, you get more options. You can compare the policies offered by different insurers with the help of a term insurance plan calculator to ease the daunting task of selecting a suitable policy.
How much should be the sum assured?
While buying a term plan, ascertain the household expenses, medical bills, cost of children’s education, and various other financial aspirations. If you follow the thumb rule, the sum assured should be minimum 10 times your annual income. However, considering the rising expenses related to education and the increasing inflation rate, ensure that the sum assured should be at least 15-20 times your yearly earnings. You can use a term insurance plan calculator to determine the premium payable for the ideal sum assured.
Do not let your absence affect your children’s growth and progress. Secure their future with a term plan and lead a stress-life.