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Term insurance is often considered an important financial tool, but most people fail to understand why. To explain the importance of family financial security, it is one of the most affordable ways to secure a large life cover for the family is through term insurance. Let us look at why term insurance is essential and the importance of family financial security.
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Note: Know more about what is term insurance first before reading this article.
The family’s financial security offered by term insurance is important for the following reasons:
Peace of Mind: One of the main importance of financial security is that it provides stability and reduces stress about unexpected expenses.
Pay for Child’s Education: Family financial protection enables individuals to pay for the child’s higher education, new business endeavors, or fund their wedding.
Secure Retirement: Family financial security ensures a comfortable retirement, allowing individuals to enjoy their post-retirement life without financial worries.
Health and Well-being: Financial security is linked to better physical and mental health outcomes, as financial stress can take a toll on overall well-being.
Unexpected Emergencies: The term or life insurance payout can help individuals pay for any unexpected emergencies like medical costs or treatments that may arise.
Term Plans
Let us take a look at the importance of family financial security in India:
Income Replacement Plans
If you are the main income earner of your family, then in your absence, the family might suffer financially. Suppose you earned 40,000 per month, and your family’s total monthly expenses were around 35,000, then, in case of your untimely demise, the family would not only be grieving the loss of a loved one but also struggle to meet their monthly financial needs. An income replacement term insurance can help your family maintain their current quality of life.
Fulfill Future Goals and Needs
The benefit payout received from term or life insurance plans not only provides the necessary financial security in the absence of the main breadwinner but also ensures they can fulfil their lifelong goals and needs, like going on a foreign trip or buying a house. Most term plans also provide the option of enhancing the base cover of the policy with term insurance riders that can be added at nominal premiums.
Pay-off Remaining Debts/Loans
Many individuals take out loans to fulfill their dreams, like starting a business, pursuing higher education, buying a house, or even a vehicle like a car. But in case of the policyholder’s unfortunate death, the burden of having to pay off the remaining loans may fall on the shoulders of the family, which might financially stress them. A term insurance payout can help your family members pay off any remaining loans and debts in your absence.
Leaving a Large Financial Legacy
Various term insurance plans like the whole life insurance policy allow customers to ensure the family financial security by leaving a large amount as a financial legacy behind. These plans cover you for the long term (till 99 or 100 years of age) and allow individuals to enhance the coverage of the policy with available riders. Anyone who understands the importance of financial security for family, ensures a suitable coverage amount and term when buying the policy.
Take Care of Potential Inflation
Inflation is inevitable, and while it can have various effects on the business and economy as a whole, it also majorly impacts the family financial protection. Suppose you currently earn 50 Lacs, and as a means to replace your income, you buy a 50 lakh term insurance. If you suffer an unfortunate death after 15 years of the policy term, then the 50 lakh term insurance might not be sufficient to cover your family’s needs. Therefore, if, in such case, you had bought a 1 Crore term insurance, your family financial security, as well as the potential inflation, would be taken care of.
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Term insurance is essential for anyone who understands the importance of financial security of the family. These plans offer large life cover at affordable premiums and provide family financial security through death benefits payable on the policyholder's death. You can compare and select India's most suitable term insurance plans online on Policybazaar.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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