TERM LIFE INSURANCE PLANS…………… WHY?
If you died tomorrow would your spouse or family have sufficient funds to pay the mortgage, pay off credit card debts or send the children to college? Have you taken enough life insurance to ensure that if you die too early your family will get a sum that will ensure that they do not have to make any adjustments in their life style?
We all take insurance on our lives, however, how many of us take insurance cover on our lives with the above objective in mind. Most of us just do not have enough life insurance. To put in other words most of us are under insured. Most of us still consider insurance to be a tax planning tool and not as something that will help our family in case of our death. Though the amount for which a person should be ideally insured depends upon ones particular financial needs or life style, however, as a rule of thumb, one should have life insurance equal to at least 10-12 times his annual income.
Most of us also avoid taking high insurance cover because we feel that high insurance means higher premium. This is because most of us are not aware of all the insurance plans. We often come across life insurance agents selling us insurance plans for our children, for our retirement, ULIPS etc. All the above plans have an investment element attached to them & so they are costlier i.e premiums are high. We blindly purchase the insurance plans offered to us by our insurance advisors rather than we ourselves analyzing the alternatives. Rarely, we come across life insurance advisors who suggest us a plan called term plan. Term life insurance is the cheapest form of insurance. Unlike other insurance plans available in the market today, term life is a pure risk cover which provides a tax-free death benefit to your dependents in case of your early or unfortunate demise within the term of the policy. If you do not die within the term, the policy expires and you receive nothing.
Term plans are not the favourite of many of the life advisors because they get low commission on their sale. So they do not recommend the same to their clients .The other reason why term plans are not favorite is because its very hard for most of us to grasp the concept of insurance as purely a death cover. We still want to get something back if we do not die during the policy term.
The term insurance policy that you take is a necessity for your family. If you are young and in good health a low cost term life insurance policy does exactly what you expect it to do by financially taking care of your beneficiaries if you die. It also gives you a peace of mind when you are aware that you have adequately provided for your family if you die. This in turn will increase your life span.
So if your life advisors have still not suggested term plan,its time you looked for somebody else for your insurance requirements.