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If you compare your life to what it was just a decade ago, it must look strikingly different. Today’s ever-evolving world directly impacts your financial standing as it entails increasing inflation rates, growing lifestyle demands, and aspirational thinking. Therefore, planning your life at an early stage has become imperative, and for this purpose, you must consider appropriate financial instruments.
If you are beginning to put your finances in order, a term policy may be an ideal choice to add to your investment portfolio. Not only does a term policy provide financial security for your family, but it does so at affordable rates.
While you may have heard about a term policy, you may not know how it can help your family in the long run. If you find the best term policy for your family at the right time, it can prevent tremendous financial stress in case of an unfortunate incident. Let’s look at some of these situations where a term policy can come to your rescue:
- Sudden Loss of Income Source
As an earning member of the family, there are responsibilities that you must fulfil for your dependents. However, the financial pressure to meet regular and major expenses, along with saving for the future, can become overwhelming. Not to mention, your efforts for wealth-creation and savings may become pointless if you do not have a contingency plan.
In simpler terms, a term policy acts as an underlying safety net for your family while you work hard to provide them with a life of comfort. In case of your untimely demise, it can cushion the impact of losing an income source. Otherwise, a sudden loss can be quite damaging to their financial situation.
Among the term insurance benefits, you also have the option to choose the payout method for the death benefit. For instance, you can choose for your family to receive the amount as a lump-sum payout or in the form of regular payments over a period to replace the steady income flow.
- Inability to Pay Outstanding Debts
Most people opt for loans to make significant purchases such as a car or a house. You might also plan on taking an education loan for the higher education of your child. Repaying the loan can be a lengthy process, taking years to take care of your liabilities completely. During this time, if something were to happen to you, your family would be left with the burden of debt repayment.
However, if you chose the best term policy on time, it can considerably reduce financial pressure. The crucial thing to remember here is that you must be mindful of your future financial plans to make sure the sum assured is sufficient when you are buying a term policy.
2. Struggle to Keep Up with Regular Expenses
Losing a steady income source can lead to major financial problems. When you are not around, your family may have to cut down on expenses and struggle to meet the desired standard of living. Moreover, the burden of paying for regular expenses and covering other significant costs can take a toll on a person’s well-being. In such a scenario, a term policy can help keep your family afloat and live a life of dignity and financial independence.
3. Give Up on Life Goals
Your loved ones have dreams and life goals of their own which can go off-track due to lack of sufficient funds. To prevent this from happening, you can find the best term policy and customize it to the needs of your family. Most insurance providers offer an insurance calculator which lets you estimate the required coverage amount, on the basis of your financial profile.
You can choose the sum assured, keeping in mind the future expenses, for which your family may require financial assistance. This way, you can enable them to fulfil their dreams, even in your absence.
4. Compromising Your Child’s Future
If you are a parent, your child’s well-being is always on your mind. So, securing their future should be a priority among your financial plans. Having a term policy that can cover their needs in your absence can give you peace of mind. It will allow them to follow their dreams without worrying about the financial capability to do so.
As a hard-working individual, your focus is always on saving more and spending less. Since India is set to become the youngest country in the world, it is crucial to understand the evolving financial demands. According to a report from Morgan Stanley Research, millennials are already the main wage-earners in most families, adding to 70% of the total household income. Considering this, your financial planning must begin at an early age to manage the upcoming expenses efficiently.