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A term Insurance Plan is designed for every sector, be it self- employed or salaried. It offers protection to your loved ones in your absence.
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Most of the individuals’ desire to be a businessman or an entrepreneur and break the malicious circle of monotonous jobs 9 to 5. They become independent in professional decision-making. This sense of responsibility and ownership results in remarkable financial growth for the business and the person. However, being an entrepreneur simply means that you are entering a high-risk area. To safeguard the risk, only protecting your business is not enough, you are also required to protect yourself. This is the case where the term plan comes into play.
Term Insurance is defined as the agreement between the insurance company and the insured (policyholder), where a specified sum of money is paid to the family of an insured person by the insurer in case of the policyholder’s death. While understanding the definition and meaning of term insurance, it is important to know that Term insurance is the simplest and purest type of life insurance policy that provides overall financial protection to your loved ones against life’s eventualities.
Note: Now that you know that what is term insurance plan you can easily buy a term plan for your loved ones.
Below are some of the points that will further make you understand the importance of term insurance for Entrepreneurs:
Unlike salaried individuals working in a 9 to 5 cycle, earnings from your business can be highly inconsistent. Additionally, if you have just started your business and the returns are not coming too high after putting in full effort. As a self-employed person means income generated from it totally depends on the amount of power you are putting in. In such cases, your death can cause financial difficulty both for your business and your family. Thus, it is important to financially protect both of them from such conditions. You can easily purchase a term insurance plan to secure your loved ones and another to protect the business.
If you are running a business, its growth always needs funds, be it for expanding the business or for working capital. Financial institutions or banks can provide funds to your business, but this means more liabilities for you. In case of your absence, the business liabilities will slow down your business but also affect your family financially. Term Insurance can help you lessen this kind of risk, thus protecting the family’s finances.
In today’s times, both partners earn and contribute equally to household expenditures. Whether long time savings or child’s education plan, most houses plan their finances accordingly, keeping all the risks of the future in consideration. However, in a small middle-class-owned business, a part of families still has a single breadwinner. So having a term plan can protect your spouse in long run from the financial stresses in your absence.
The most unique feature of term insurance is its low premium rates. As a self-employed, you may have invested in other market tools that provide high returns. In such situations, plans should only be bought for its basic aspect, which is death or life cover benefit.
Note: You can easily calculate the term plan premium by using the term insurance calculator online tool.
Term insurance plans are one of the purest and the simplest types of life insurance policies. These plans are not complex, be it associated with coverage details or rate of return. It offers coverage to the policyholder and a hassle-free payout to the nominee in case of the death of the policyholder during the policy term.
Term Plans
With all the term insurance benefits discussed with you, the inclination to opt for a term insurance plan naturally increases. So, here are a few steps that you should keep in mind before purchasing a term plan:
Policy Term: As an Entrepreneur, you are definitely going to work more than a salaried person. Let’s say, a salaried individual works till 60 years of age whereas a self-employed person would work for another 10 years. Always make sure to choose a plan that provides you coverage till 85 years of age at least.
Premium Payment Term: For a salaried individual, a regular premium payment option is the right way as they have a regular income flow. Whereas, for an entrepreneur, it is important to pay all the premium amounts as early as possible using option-limited premium payment terms. With this option, you can pay for the whole policy term just within a few years and become stress-free.
Suitable Sum Assured: Before purchasing a term plan, ensure to decide an adequate sum assured. The sum assured amount should be equal to all the outstanding liabilities, expenses, and loans required to maintain the existing lifestyle and achieve life objectives such as marriage, retirement, and children’s education.
Medical Tests and Declarations: Make sure to completely and correctly fill the proposal form at the time of purchasing a term insurance plan. You should undergo the medical examination as requested by the insurance company. This ensures that the company is fully aware of the medical history/condition and you have not repressed any facts related to your pre-existing ailment or health, thus this will help your dependents while applying claim.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†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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