Being financially secure is one of the most important things in life. We all make investments in various financial instruments for returns so that the future of our families is secure, and they can have a better life ahead. One of the best investments you can make towards that goal is to get a term insurance policy that guarantees a lumpsum amount up to the sum assured to a person’s family in case of untimely demise so that their family doesn’t have to face hardships in face of an already big loss in their lives.
What is a term insurance policy?
A term insurance policy is unlike any other investment as it is purely a life insurance cover that comes with a guaranteed payout, unlike other investments that do not offer such a payout. Moreover, it also comes with additional benefits and riders that make the policy even more potent in terms of the overall benefits you can expect as long the policy is in effect. However, being strictly a life cover only, it doesn’t offer a savings or maturity benefit, but its lower premiums make it an ideal investment option for people with dependents to safeguard their financial freedom in case of the unfortunate passing away of the policyholder.
How does it help in financial stability?
Simply put, a 1 crore term insurance policy comes with an assurance of a guaranteed payout of the same amount as the sum assured in case of an untimely demise of the policyholder. While other investments take time to liquidate, and some may even return lower revenue on investments; the premium you pay on your term insurance plan guarantees the amount regardless of the market conditions. This helps provide a financial safety net to your family, so that they don’t have to compromise on their lifestyle, education, and household expenses, making term insurance policies a much better investment compared to others.
Are there any additional benefits that make it an ideal investment for financial stability?
Yes, a term insurance policy offers additional benefits and riders that you can opt for to increase the scope of cover apart from the death benefit payout.
Critical Illness Cover
This offers a payout in case the policyholder is diagnosed with a critical illness from among the list of conditions as laid out in the policy document. An amount is paid as a lump sum to help take care of medical, and household expenses as critical illnesses generally take longer to recover.
Accelerated Death Benefit
In case the policyholder is diagnosed with a critical illness, the sum assured is paid out in advance so that they can get supportive care while being able to provide for their family’s expenses. This provides a financial cover to the family helping them cope better with the situation.
Accidental Death Benefit
This rider pays out an additional amount up to and above the sum assured to the policy holder’s nominee (s)
Accidental Disability Benefit
In case the policyholder is rendered disabled due to an accident, a percentage of the sum assured is paid out to them to take care of medical and household expenses. The percentage of the sum paid out depends on the nature and severity of the disability and varies across insurance service providers.
If providing a financial safety net to your family, and ensuring their financial stability is your goal, then getting a term insurance plan makes absolute sense as it does not come with the market risks associated with a lot of the other investment options.
Please note that riders are not mandatory and are available at additional cost.