Term Insurance - Risk Cover/ Legacy Planning

From our childhood we have heard about insurances. But how do we treat them? We treat them as if they are another investment option and not the risk cover. We always fear to lose money, which we should be scared of. But does that mean we should lose more money (intentionally/ unintentionally) to save those few bucks? We shouldn't, but we are doing this, we are treating these insurances as an investment option and loose more than we save.

We prefer to invest in endowment plans as it returns the money with some interest and provide minimal cover. We don't go for pure insurance/ term plan, and why is that? Simply because it doesn't return money and if it do, its just the amount we paid. We forget that this pure insurance premium is much-much lesser than other insurances and gives high cover. Instead we setter for less as there is return of premium with some interest.

Thus, today I would be talking about this term insurance and may be just may be I will be able to change that mind set and make everyone understand that why should we go for term insurance.

Few Facts:
  • Term insurance is the basic life insurance/ pure protection plan.
  • Lowest premium of all life insurances
  • Covers the financial risk for the dependants
  • Can act as legacy planning
  • Have an option of return of premium
  • Once taken the base premium will remain constant, but the tax rates may changes as per govt. rules
  • NOT for everyone like other insurances.

Term Insurance             

"Term Insurance is our best calculated bet"


We can get a cover of 1 Crore in just 3.4 Lakh that to when paid in 10/12 years with cover till the age of 85 and this premium keeps changing with each passing age.  Thus, sooner we take, lesser it costs. But do we go for this? No. We don't. As most of us think it as a waste of money, we wouldn't get anything back if nothing happen to us. But in fact at present the average mortality age is way less than 85 years. They what may come to our mind why to take cover till this age, why not less? The answer to this is in our own family/ history and also depends on lot of other factors. Thus calculating of that age is not possible for all, so what can we do? take the cover to maximum optimal age. and 85 is that maximum age. If we survive till and beyond this age, then why do we need the claim? we have lived a long life with all the responsibilities done and if we do not live till this age there might be tow possibilities either it will help the dependants financially or may act as our legacy. So, where is the loss? Why are we so keen to not take this cover? when there is more chance that it will be redeemed in future.

Now what about the paying term? We should choose it limited pay. Why? There are many reason for that. Firstly, before we retire or other responsibilities kick in, we will be done with this. Secondly, we wouldn't need this extra load on us during our retirement.Thirdly, this insurance doesn't end if we are not able to pay the premium (T&C apply), the Sum assured will reduce proportionally.

Most important thing to know is that, it NOT for everyone. We need to show that we deserve it, we need it. We should be earning and have been filing income tax return/ have pay slip. If we are not earning or don't have a govt. recognized proof of our earning, then we are not eligible to take this term insurance. Secondly, we need to be medically fit. If we are not medically fit, we would't be getting the term insurance and if company allow; it would be with extra premium. Its a saying in the insurance field that 

"Company is sitting to reject term insurances, as the premium is very low and the cover is very high."

And another important thing to know is that how much insurance is good or enough for us. If we are already holding the insurance is it enough or is it less or is it more. Until and unless it is less than the requirement its good enough, else we do need to revise the insurance cover whenever we get a chance to. 
"Term Insurance is a part of GOOD Defensive Game Plan"
Location: Sadani Bhawan, Bagaria Pech Madar Gate, near Dr. PANNALAL CLINIC, Sarai Intejam Ali, City, Aligarh, Uttar Pradesh 202001, India

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