Select term insurance based on your life stage
A term insurance policy is a type of policy that gives life cover for a specified period of time. In case of the policyholder's death, the nominee receives the promised amount if the policy is active during the event.
Your financial responsibilities change at every stage of your life. You may want a holiday in your 20s, but your child's education may be a priority in your 30s. That is why it is important to choose a term plan based on your stage of life so that your family is secured in your absence.
Term plan on basis of life stage:
- Unmarried and young: At this stage of life, most people may not have too many financial responsibilities. You should opt for a term plan that covers the post-retirement financial needs of your parents. In case you are the only person earning in your family, do look out for term plans covering your siblings (if any).
- Married and no children: Getting married is a big step in life. You and your spouse decide to build a life together. You both may also plan to take out a home loan or a personal loan on this new journey together. That is why it is important to opt for a term insurance plan that secures your spouse's financial needs in case of your unfortunate demise.
- Married and have children: At this stage, securing your child's future becomes the top-most priority. You also need to take care of your spouse's needs in case of unfortunate events. That is why you should opt for a plan that covers all of your child's current as well as future expenses.
- About to retire: These days it is beneficial to plan your retirement in advance. Save while you work, so that there is no financial stress in your golden years. It may be better to choose for a term plan that not only gives life coverage but also gives a return of premium option.
- Critical illness coverage: The occurrence of a critical illness can put your family under financial stress at any stage of life. It is important to keep these things in mind and stay prepared well in advance for any such event. In such cases, choose a plan that gives you a sum assured in case of being diagnosed with a life-threatening illness.
Points to consider when choosing a term plan:
There are a lot of term insurance plan options in India, but your family's financial needs and the coverage provided by your choice of term plan should match. That is why it is essential to make a note of the following points while buying an insurance plan:
- Understand your family's requirements:Do a self-analysis of what are your family's current financial priorities and future needs. Check for multiple term plans that match your goals and compare between them on different parameters, then choose a plan that fulfills most of your requirements.
- Get to know your insurer: A lot of companies offer term plans, but it is important to choose a reputed as well as a reliable insurance company to avoid fraud. Research about the company before making an investment and ask your family and friends if they have previously bought any insurance plan from that company. If you are going through an agent, verify if the information provided is correct or not.
- Consider your financial liabilities: The sum received by your family in your absence should be enough to take care of their needs as well as cover any financial liabilities taken by you, such as a loan. This is because your family will have to repay the loan in your absence.
- Check the policy tenure: Policy tenure is basically the period for which the insurance company will provide coverage. It also is the period for which you will pay a premium. Choose an option that gives maximum coverage at a reasonable premium.
A term insurance plan is an important investment. That is why it is advisable to double check all the norms and then buy a plan.
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