It is important to invest in life insurance, as the loss of life can hamper the family’s monetary future. You need to buy the most suitable policy to ensure that your family members maintain their lifestyle and stay financially independent even if you are no longer around.
Term plans are one of the best options when you are considering buying a life insurance policy. If you wish to gain more knowledge about what is term plan and how it can safeguard the economic wellbeing of your loved ones, read on.
A term policy is a pure life protection insurance plan that acts as an income replacement tool for the family in case of the policyholder’s untimely death. This policy offers a high sum assured at an economical term insurance premium. While purchasing a policy, you need to ensure that the life cover meets your family’s monetary needs and allows them to live peacefully without worrying about finances.
Your family’s requirements will keep on changing with time. Therefore, it becomes necessary to review the growing needs of your family and align the life cover accordingly. Here are five life events that can give you a hint of updating the term insurance coverage.
- Appreciation in income
The life cover of your term plan is based on your family’s financial needs and the premium you can afford to pay. The sum assured that your family receives in the case of an untoward incident will help them meet household expenses, pay medical bills, fund children’s education, clear debts, and accomplish long-term financial aspirations. Therefore, it becomes necessary to raise the life cover of your term plan after you get a significant hike in salary. The income growth will improve your family’s standard of living. So, it makes sense to increase the life cover of your term insurance plan.
- Marriage
An unmarried individual does not have many monetary obligations to fulfill. However, if you are planning to marry, you will have an additional responsibility on your shoulder. The sum assured should support your spouse along with other dependents in your family if an unfortunate event occurs. Therefore, it is a wise idea to update your life cover.
- Purchase of a new house
If you have just bought a house with the help of a home loan, it becomes essential to align your life cover and include the liability amount. This is because if something tragic happens with you, your dear ones can utilize the policy’s sum assured to repay the debt. So, you need to ensure that even after repaying the home loan, your dependents have sufficient money to take care of their requirements, accomplish their goals, and maintain their lifestyle.
- Childbirth
Becoming a parent is one of the most beautiful phases of life. However, parenting a child is expensive. The costs related to school fees, tuition, extracurricular activities, and medication are rising. Besides this, the expenses of higher education will affect your finances, especially if your child wants to study abroad in the future. Therefore, it becomes vital to increase the life cover, as the shortage of funds should not become a barrier for your child to fulfill his or her dream when you are not there.
- Other eventualities of life
Have you thought about what will happen if you acquire a permanent disability? Will the regular flow of income continue? Such life events can affect your financial position. Therefore, it becomes necessary to adjust the sum assured of your term plan accordingly.
The term insurance premium will rise with the increase in life cover. However, it is worth every single penny, as the policy can protect your family’s monetary future if something unforeseen happens with you.