Term Insurance could be a boon or a bane
Term Life Insurance could be a boon or a bane
While we consider so many things before we travel to a different place or terrain or a country, first thing comes to mind is the risk that place is exposed to, without assessing the risk it would be self-destruction for someone making their travel plan. Likewise, while you think of your financial freedom, savings or an investment it is prudent to do a financial risk assessment that you and your family is exposed to.
Like you protect the value of your house, car, machinery, jewels and so on through available options it is very imperative to protect the value of the earning member of your family. Human beings are also an asset as long as they make income.
Risk assessment needs to be approached logically rather than emotions. Dying too early of an earning member in a family or living too long of a non-earning member both are considered as risk technically because in both the cases the family shall face a financial loss. So, in both the cases the life of the person needs to be Insured, A pure term plan and a pure endowment plan are good choices to handle both the risk.
The awareness of buying a term plan by the people is comparatively higher than previous years thanks to financial advisors and technology for making this happen but still a long way to go. Recent studies by TOI says that almost 70% of the population in India still doesn’t have a life insurance policy. Even people having life insurance policies don’t have adequate coverage.
Story of Ramesh and Suresh.
Ramesh understood the importance of having adequate life insurance coverage when his friend Suresh collapsed with Heart attack and was declared dead in hospital. Suresh was earning close to INR 75000 monthly, he had a life insurance coverage of just 5 lakhs. Ramesh could feel that the small amount of 5 lakhs was an insignificant and insufficient sum for Suresh's family to meet their daily expenses, rent and children’s education.
Ramesh approached a financial advisor to understand his life coverage needs and the kind of plan he needs, he was suggested a term insurance plan by the advisor and he also informed that term insurance is the cheapest form of insurance and also cautioned that he needs to pay throughout the premium payment term to enjoy the coverage. Ramesh was happy to take a term life insurance and he did so.
Few years later Ramesh lost interest in paying the premium because Term plans normally don’t have any maturity benefit and stopped paying his premiums. Here the very purpose of taking insurance is defeated, so continue paying the premium till the policy comes to an end and keep your family financially protected. Term Insurance plans are a boon if continued.
Note: It could be difficult to revive a lapsed policy at higher ages in some cases the Insurer refuses to revive the policy due to health hazards. Always consult your financial advisor or Certified Financial Planner