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.
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
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
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.
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
2.Your Other Assets
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
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
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.
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.
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!!