We all work tirelessly to ensure future financial stability for ourselves as well as for our loved ones. However, while earning is important, adequate knowledge about investment in financial avenues can help mitigate unpredictable circumstances.

Term insurance is one such financial tool that holds a valuable place in an individual’s financial portfolio. This is because a term plan ensures that the family of the policyholder is looked after even after his/her death.

One of its benefits is that a term plan offers more sum assured for a low premium amount. If you wish to calculate the premium payable for a policy, you can make use of a term plan calculator that is available for free online. It is advisable to buy term insurance early on in life to optimize your savings.

Before enlisting the kind of people who most need life insurance, it is important to acquaint yourself with the definition of the term policy.    

Defining Term Insurance

As the name suggests, a term plan provides financial protection for a specified, pre-determined term. This term could be anywhere between 10, 20, 30, or 40 years during which, the insurance holder is expected to pay a premium to the insurance provider. Individuals seeking whole life term coverage can also opt for Tata AIA term insurance that offers protection for up to the age of 100. The premium amount is decided based on the age and the health of the policyholder.

These two factors help analyze the risk profile of the individual seeking insurance.

If the policyholder passes away while the term is still active, the insurance provider pays a death benefit to the surviving beneficiaries to look after their expenses. When you buy term insurance, it is imperative to be completely honest with your insurance provider about your health conditions and smoking habits.

Non-disclosure of critical information and health conditions can lead to claim rejection which can greatly compromise the financial footing of the policyholder’s family.

Six Types of People Who Need Life Insurance

While it can be argued that every earning individual must save in term insurance, here are the six types of people who most require saving in the policy: -

• Sole Earner of the Family
  There is an ongoing misconception concerning term insurance, and it is that you don’t require one until you are married. However, every individual who has financial dependents needs to save in a term plan. When you are the sole breadwinner of the family, you are inclined to think of what will happen to your loved ones in your absence.
  
  Before marriage, financial dependents might include aged parents. If something were to happen to you, it can be challenging for aged parents to look after themselves without any financial cushion to rely on. Especially concerning the rising hospitalization expenses, which can burn a sizable hole in savings without insurance.
  
  Contrarily, if you are married and have a spouse (working or non-working) and children, then term insurance again becomes an important financial saving. Undertaking the expenses of higher education or a child’s marriage or even meeting everyday expenses requires a strong financial backup which can be provided by term insurance in your absence.
  
  
• Single Parent
  Whether you are separated from your partner or if they have passed away, your children rely on you for meeting daily expenses. In such a scenario, a term plan can help secure your child’s future. Tata AIA term insurance has various saving options to align with your financial requirements.
  
  Whether it is saving for the future of your child or securing the financial future of your family, these unique term plans can help your children achieve their dreams without compromising on anything, even in your absence.
  
  
• Working Parents
  As the cost and standard of living keep increasing, both parents have to work to keep up with the expenses of the household. Managing the rising expenses in the absence of a spouse can become acutely distressing. Aside from looking after the everyday expenses, one also has to consider the long-term financial goals such as buying a house or funding for a child’s schooling.
  
  Therefore, before you buy term insurance, it is important to estimate life insurance needs so that you ensure adequate coverage for your family. You can make use of a term plan calculator to plan out your financial requirements.
  
  As a male policyholder wanting to further fortify your wife’s financial future, you can opt for an insurance policy under Married Women's Property Act, 1874. Under this policy, in the event of your premature demise, you promised that your insurance benefit reaches your wife and is not affected by external circumstances such as outstanding debts, family feuds, etc. The policy can also be purchased if you are a widower or you have parted ways with your spouse by naming your children as the beneficiaries. However, this benefit can only be availed at the time of insurance purchase.

• Individuals Who Have Undertaken a Home Loan
  Buying our own house is a dream for many of us. However, with the prices for real estate soaring, it is practically impossible for middle-class families to buy it without the help of a home loan. While banks have made it easy to get a home loan, if something were to happen to you before its repayment, then the financial standing of your family is compromised.
  
  A term plan promises that even after your passing, your family will have a roof over their head and adequate finances to manage their everyday expenses. 
  
  
• Individuals with Outstanding Liabilities
  Most middle-class families require the financial assistance of banks to achieve their long-term goals, which could be buying a car, setting up a business, or any other personal goals. If you were to pass away without the repayment of your loan, your family will have to shoulder its burden while being in an already vulnerable situation.
  
  To prevent this from happening, it is essential to factor in your liabilities when you estimate life insurance needs. Term insurance can help your family shoulder the burden with dignity.
  
  
• Entrepreneurs
  While there is an inexplicable joy in owning and running a business, self-employed individuals have to make peace with unsteady income. The instability of business makes it more important to save in term insurance. Moreover, business persons have a legacy to look after and leave behind. The death benefit from a term plan can take care of your business even in your absence.
  
  
  

To conclude

Term insurance is an important saving regardless of where you belong in your financial journey. The sooner you save in one, the more you can save on the premiums. Term plan promises the financial security of your loved ones and ensures that they don’t have to compromise in their life even after your demise.

L&C/Advt/2022/Aug/1907