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
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ReplyDeleteA article on "Life Insurance could be a boon or a bane" is shortly written its pros and cons.
DeleteA Short note by me: It is important to carefully consider your own situation before making a decision, do not decide to go ahead with it like Ramesh and Suresh made their decision with life insurance. make sure your clear with their pros and cons and start your life insurance policy.
A article on "Life Insurance could be a boon or a bane" which I personally liked their short and clear explanation
"Term Life Insurance could be a boon or a bane" is a well defined article about how important a life insurance could be. no one knows what happens next if your the only earning person in your family its better to take a term life insurance so that in future it may be helpful. you might lose paying premium but think a second that it might be helpful to your family in many ways .
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