Financial protection is a very important component in today’s bustling times. You need multiple sources of income and also excellent means of growing your wealth, such as investment savings, etc. Still, the economic dips in unpredictable scenarios can be baffling at times.
Life insurance plans provide peace of mind in that aspect. Even though it is hard to know how much time you have, preparing a financial safeguard for your loved ones can be very relaxing. One of the best solutions to do this is a term insurance policy.
Why is term insurance a good option?
Term insurance plans are highly affordable types of life insurance. These are policies available for very low rates of premium and were designed so anyone and everyone could afford life insurance.
Term insurance policies come with flexible sum assured and tenures. You can purchase term insurance for as low as 10 years and as high as 100 years of coverage. You can also purchase a 30 lakhs sum assured to 10 crore term insurance. Based on your family’s future financial requirements and your own health, you can purchase different types of term insurance plans with varying advantages.
Is 10 crore term insurance a necessity?
Term insurance comes with many benefits. One of the most desirable ones is the high sum assured that is affordable with a low premium.
Due to the flexibility of term plans, it is common for policyholders to opt for 10 or 15-year term insurance policies with the return of premium. These plans provide necessary coverage but also add the maturity component in term plans.
That said, the coverage makes a huge difference. While 30 lakhs term plans may be much more affordable, you need to consider the needs and expenses of your loved ones. Here are some of the main reasons why 10 crore term insurance can be very, very helpful:
- A 10 crore settlement is a huge sum of money that your loved ones can use for their future planning.
- The 10 crore term insurance premiums are relatively low as compared to the high sum assured.
- The 10 crore death benefit can help your family settle massive outstanding debts.
- Every year, the INR is subjected to inflation, which may reduce the value of your chosen sum assured. However, 10 crores is a big amount which, even when affected by inflation, will not lose its value to a large extent.
- Instead of a 10 to 15-year term insurance, if you opt for a longer tenure, then the premium for 10 crore term insurance will be reasonably lower every year. Therefore, you can claim tax benefits on them.
- The large settlement enables your loved ones to pursue their goals, such as higher education, business, and other progressive ambitions.
A 10 crore term insurance may not be a necessity, but if the premium is affordable, it is a great idea. The total coverage is enough to see your family through all financial highs and lows for a while. For middle-class families, a 10 crore term insurance settlement can go a long way to pursue higher ambitions. Whereas, in high-income families, the plan can help settle immediate financial uncertainties.
How do we determine the ideal time period for term insurance?
Choosing the correct timeframe for your term insurance is just as important as the coverage. Since term insurance plans are flexible, it may be tempting to opt for 10-year plans with a return of premium. This would be a good idea to build a savings plan, however, for the family’s financial stability, you may want to choose a longer and more realistic term plan.
For instance, let’s assume you purchase 15-year term insurance with a return of premium at an early life stage. Being a young policyholder with a short tenure assures that there are higher chances of you surviving the policy tenure. Therefore, you will be entitled to the maturity benefit, i.e., a lump sum payout of all the premiums you paid over the years. This would be an ideal savings plan to help you navigate financial stresses and important life stages.
However, if you are middle-aged, a 15-year term insurance may mean something different to you. You may want to consider setting up a corpus for your loved ones in the event of your untimely demise. Based on the premium for 15-year term insurance, you may not be able to afford a high sum assured. This could be problematic, which is why a longer tenure may be more beneficial.
Your lifespan may be unpredictable, however, based on your health and lifestyle, you can estimate a sufficient policy tenure. Short term insurance tenures are ideal if you want to build a savings fund, while longer tenures are better if you want to secure your family’s future with adequate sum assured.
