Tag Archive | "Term Insurance"

The True Value of a Term Insurance Plan

  • Easypolicy
  • 11 Nov 2016

We care so much about ourselves, we hold grudges with people who treated us not the way we wanted or hurt us in some way whereas we have the tendency to be favorably inclined to those who did something nice for us. Our lives are so much centered around ourselves that we do not even realize but we often fail to the realization the we enrich our lives only when we create values for others. It is often said that man is a social animal, this statement is very deep, it emphasizes that man or human beings have in their nature to do something for others so that their communities can develop. Wise people say that charity begins at home.  It is good if you think of doing great things for the society but first priority is to ensure security of your dependents.

I have a friend who has a deep grudge that because his parents died quite early in his life he had to struggle a lot both emotionally and financially. When we are close to someone it is very difficult to overcome their loss. To save someone from this loss is in no one’s hand, people can give their shoulder to cry or console a distressed person in any other manner but no one can replace that life in one’s life. But thankfully we can do something about the financial part. Had his parents taken life insurance policies he would have been saved from going through that financial mess, their death would have been a little easier for him. He could have drawn some respite in the fact that he didn’t have to compromise on his studies. Such financial troubles have made him very hateful for life and he often curses his destiny. Although, many of those optimistic people who believe in the power of gratitude would say that he has a bad attitude towards life but speaking very practically not everyone has that kind of developed higher wisdom.

Alright, I may have gone a little tangent from the topic, the crux of the topic is be secured and secure your family. We can do a whole lot of things when we know that we are secured. A mind full of fear and anxiety often leaves no space for creativity and determination. Taking more and more control of your life makes you more confident, even the fear of death dilutes when you know you have made arrangements for your family to survive well post your death. This is the reason that we invest in a life insurance plan.  A life insurance plan, particularly a term insurance policy is a beautiful product that protects your family from going into financial ruins in case God physically separates you from them.

Start taking out a small portion of your earnings and deposit the Premium for this plan. This small endeavor is creating a huge value for your family.  Apart from the monetary benefit the value would be gratitude. Your family would have no grudges from you and would always thank you for this step. They would proudly tell others that because you took that step for them they got saved from going into miseries. Your decision would inspire many others to take similar steps. That is the value you will be creating in the society. You wouldn’t want your dependents to be another lot of hapless people who would live their lives cursing their destiny post your death, would you? Then don’t be miser when you hear about a Term insurance plan. Many short sighted people often argue that this plan has nothing for them, no living benefits. These people need to broaden their thinking and shouldn’t limit themselves to themselves. Life is much beyond the self and you would be surprised that life gets enriched when you think beyond self.

How one Can Choose The Best Term Insurance Policy?

  • Easypolicy
  • 29 Aug 2016

Whenever we are investing in or purchasing a financial instrument, a lot of things are hovering in our minds. We do in depth study about the same and compare Term plan against the plans of other companies. Similarly when we take a loan, we compare interest rates of various banks and lenders when we apply for loan, similarly we compare rate of returns of various investment schemes when we plan to invest our money. Buying a term is no different; you need to analyze how much cover you need to replace your income after paying off your liabilities and then compare Premium of various companies.

Like any other investment scheme or financial instrument the amount payable i.e. the premium is not the only thing you should ponder upon. There are many other factors that you should consider like, the term of the policy, Claim settlement ratio (CSR) of the company and its market reputation. You buy a term plan so that your family does not suffer financially if unfortunately something happens to you. Thus, you should buy from a company having a good reputation of settling claims without complications and tantrums. To access this one needs to compare the claim settlement ratio i.e. the number of claims the insurance company settles out the total number of claims registered with it during the year. The CSR closest to 100% is best, considering that you won’t be around to get the claim from the company, the claim process should be very easy and convenient for your family to recover the money. Complex claim process might discourage them and they may feel harassed. It is very likely that they may be going through a lot of emotional stress from your death. In that scenario you won’t want them to struggle getting the claims.

Another important thing is to compare the term or duration the company is providing. It is always advisable to go for the maximum term. Your earning life i.e. life prior to retirement should be covered as till then there would be loss of income from your death, post retirement there would be no such loss. If you are in business or profession where there is no defined retirement age, you should go for the maximum term you can get to increase the chances of your family getting the claim.

When we are choosing a term plan there cannot be one best product for every person as each of us differ in our needs and preferences. Some people are comfortable with paying annual premium; some are better paying a monthly, quarterly or semi-annual premium. Thus, on the companies that offer them premium paying mode of their choice is the best for them.

Similarly, the payout of companies differ, some companies pay a lump-sum whereas others pay periodically. There are companies that provide option for both. If you think your dependents are mature and can manage a lump-sum amount without carelessly spending it, then you can go for lump sum option or else periodic is better for you.

 Also, you may know that term plans are highly customizable. There are many extra features called Riders that you can add to your term plan to enhance its utility and Coverage by paying a little extra on premium. You may sit with your agent or study these riders online to assess what all riders suit your life requirements. You can compare companies on whether they provide the rider you are looking for. Attaching such riders you can strengthen your term plan so that it best serves your requirement at the minimum price possible.

What Should be The Minimum Term Insurance Coverage For You?

  • Easypolicy
  • 27 Jul 2016

One of the stray objectives behind any life insurance plan is to prepare for your death. Don’t worry, this article is not about some occult rituals but highlights the financial implications arising from a sudden death of an earning member of a family. No matter how much we avoid thinking about death but it still is the universal truth, the surest thing that will happen to you. It is also called ‘the ultimate fate’ and when you will meet it, no one knows.

To explain my point deeper I am going a little tangent from my main topic. We often take death as a distant thing and do not feel the urgency to plan for it. If you meet any ardent spiritualist preferably a sannyasi, you will know how people plan about their death. These people live their lives being always conscious about the impermanence of life. They plan their responsibilities in such a way that they can meet death anytime without worries.

For us householders, the responsibilities are greater as we have dependents upon us. If we have raised a family we are highly responsible for its well being. Even death is no excuse to shrug off our responsibility. Knowing that we can die anytime, we should plan for the security of our family’s future and arrange for their comfortable sustenance in our absence. To help us fulfill these responsibilities we have life insurance plans.

Life insurance plans, specifically a Term Plan, is designed to secure the future of the nominee/nominees of the Policyholder against the financial hazards arising from the death of the latter during the currency of the policy. The Coverage should be enough to replace your current annual income so that they need to compromise on their standard of living.

People often ask their insurance advisors about the minimum coverage they should have in their term insurance plan. Well, this question can be answered by evaluating various factors. Some of them are discussed below.

1.Life Stage

Your responsibilities depend to a great extent on the life stage you are at. If you are single then your responsibilities are very minimal specially when your parents are earning and well off. After marriage you start getting the taste of responsibilities. After having children you shoulder huge responsibilities and they keep increasing thereafter till you retire and your children assume the role of bread winners. Based on the load of responsibilities on your shoulders you decide the life cover.

2.Your Other Assets

If you have other assets such as real estate, healthy bank balance, stocks etc which can be enough to sustain your family without affecting their standard of living much, then you don’t need to invest heavily in life insurance plans. Thus, your financial soundness plays a key role in deciding the sum Assured for you.

3.Your Outstanding Loans and Liabilities 

Y  our death would already be a huge emotional loss for them and therefore you certainly don’t want to add to their miseries by burying them under your outstanding loans and liabilities. To keep their dignity intact your life cover should be strong enough to pay all your outstanding payables and still leave enough for your family to live comfortably.

4. Inflation

The prices of services and commodities are not going to be same as the prevailing prices and term plans are generally bought for long term considerations. Thus, you should keep the factor of Inflation in mind while deciding the life cover. The proceeds from the insurance company should be good enough to be of some significant help to your family.

As per the industry rule you cannot get a Sum Assured of more than 20 times than your annual income at the time of purchasing the term plan. This ‘20 times’ bracket keeps on shrinking with age and health condition. Thus, the sooner you buy such plan the more is your eligibility up to which you can get life cover.

Underinsurance is a very common term in life insurance sector. If your life insurance proceeds are not enough for your family to sustain then the whole purpose of investing in such plan gets defeated. Thus, considering the above points and getting due consultation from your trusted life insurance advisor decide the minimum Term Insurance coverage for you.

Don’t shrug off from responsibilities rather fulfill them religiously and set a good example for your descendents to folliow!!