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Need assistance in choosing the right insurance plan? Get a call from our Expert.

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Why You Must Begin Financial Planning With Term Insurance

Financial planning is the centre of whatever you are trying to accomplish in the future. Uncertainty in life, unforeseen global climatic changes, pandemic scenarios, fluctuating economic conditions, rising inflation rates, etc., have drastically affected the employment levels and earnings of people, leading to extreme distress in various parts of the world.
 

As the above factors are not under your control, prior financial planning is extremely important, particularly considering your financial commitments towards your family. Financial service organisations have been introducing different products to help you safeguard your family based on your financial goals and capacity. It is advisable to begin your financial planning with the selection of a term plan online. If you are wondering, let us discuss financial planning and term insurance and find the answer.


 

What Is Financial Planning?
 

Financial planning is the detailed methodology of systematically organising your income to manage your current and future financial obligations. It takes into account your expenditures and earnings and enables you to determine what financial products you should invest in at different stages of your life. It is a prerequisite for a stable financial situation, leading towards financial independence.
 

 

What is Term Insurance?
 

Term insurance is the purest form of a life insurance policy that ensures a sum assured to your nominee in case of your demise during the policy term. One of the benefits of term insurance is that it offers a more sum insured at a lesser rate. In addition to this, the plan also offers flexible premium payment and payout options. You can purchase a term plan online by comparing the different products and the associated benefits.
 

 

Here's Why Term Insurance Should Be In Your Financial Plan
 

 

While organising your income for future financial commitments, ensuring that your financial goals get accomplished is important. For this reason, financial planning should begin with term insurance. Here are a few pointers to elaborate on the reasons thereof.
 

  1. It assists your family after your death: A term insurance plan helps you secure your family after your unexpected demise. For instance, suppose you have availed of a home loan for purchasing your dream house. In that case, repayment will become a burden for your parents or spouse if you meet with an unexpected death.
     

    It can lead to extreme distress affecting the finances of your family. Your family members may have to sell the available assets to repay the loan. With the lump-sum death benefit from a term plan, your family can repay the debts and also manage the routine expenses.
     

  2. It assists your family in accomplishing their financial goals in your absence: Long term financial goals are important in every individual's life, especially after getting married. For instance, if your son's higher education is the topmost priority in your financial plan, planning to ensure the same is financially feasible at the desired age is your responsibility.
     

    If you happen to lose your life due to an unexpected event, your son's future should not be at stake. With the term insurance payout, he can pay for the cost of his education, as required. If you have purchased a term plan early in life and opted for long term life, your family can receive more sum assured.
     

  3. It offers a life cover at an affordable premium: While looking for financial products that offer many advantages, it is also important to ascertain if they can be accommodated as part of your regular monthly expenses. It is because investing in such plans should not significantly affect your current lifestyle.
     

    Opposed to various other types of life insurance policies, term insurance is the most preferred option as it is available at an affordable premium. Insurers examine your health condition while deciding the term insurance premium and sum insured. At a younger age, the possibility of having a health disorder leading to death is extremely low, which ensures a lesser premium rate for your term plan.
     

  4. It comprises an assured death benefit: The returns from a term insurance plan are assured for your family and cannot be affected by other factors such as fluctuating economic conditions that affect market-linked returns2 in other types of investments. It offers a pure risk cover and helps manage the death risk effectively.
     

    You can go through the term life insurance policy details and understand how the sum assured is calculated for the entire policy term and how the payout happens.
     

  5. It has flexible features: At Tata AIA, per have term plans that offer a wide range of flexible features. For instance, with the Life Stage Benefit in TATA AIA Life term insurance plans, you can increase the life cover at different stages in your life based on your increasing commitments and financial strengths. You can also choose between the lump sum payout, the regular monthly income payout, or a combination of both.
     

    The income payout will start from the age you prefer, as determined during the policy's inception.
     

  6. It offers the option to add riders#: The add-on rider# benefits can help you manage several unexpected expenses that can happen in your life during the policy term. For instance, if you opt for our critical illness rider#, we will pay for your hospitalisation and other treatment charges if you are diagnosed with a critical illness during the policy term.
     

    Such a cover can help you ensure that your financial plan doesn't get affected drastically in the wake of medical emergencies.


     

Conclusion
 

The importance of financial planning in India has increased due to the aftermath of the global pandemic. People increasingly prefer to secure the financial stability of their families. A term insurance plan can be an ideal way to begin financial planning to cover the risks associated with several life events. It can help secure your family and ascertain the safety of their financial goals in your absence. It is extremely cost-effective, flexible, and offers a wide range of benefits.
 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.