A term insurance plan is one of the most critical aspects of your financial planning. It ensures your family is financially secure even when you are not around. While many people opt for a standard Rs. 1 crore term plan, there are several reasons why you should upgrade to Rs. 2 crore coverage. Let's explore these in detail.
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A term insurance policy provides financial protection to your nominees in case of your untimely demise during the policy tenure. It offers high coverage at an economical price. Your beneficiaries receive the sum assured in a lump sum. They can use this corpus to cover household expenses, pay off existing debts, fund their goals, etc.
Having term life coverage that falls short means leaving your loved ones exposed to financial vulnerability when they need support the most. The purpose of a term plan is to ensure their security, and inadequate coverage defeats that very purpose. Let’s look at some of the key reasons why having enough coverage is crucial:
Here are a few reasons why a term plan of Rs. 2 crore makes sense:
How much would it cost to get such high coverage? Well, term insurance offers affordable rates even for Rs. 2 crore, sum assured, thanks to your young age. The premium is calculated based on a few key parameters:
The younger you are, the lower the premium will be, as the probability of health issues is less when people are young and fit. Hence, someone aged 30 would pay almost half compared to a 40-year-old for the same coverage.
Statistically, women have higher life expectancy than men. So for the same age and sum assured, the term premium is lower for females.
Your medical tests, family history, lifestyle habits, etc., give insights into future health risks—people with excellent health pay lower premiums than those with pre-existing conditions.
You can typically choose a policy tenure of 10 to 40 years. The longer the tenure, the lower the yearly premium outgo.
Any additional riders, like critical illness benefits, accidental death benefits, etc., also increase your costs. But they offer extra coverage.
In addition to the above, location and insurer impact premiums slightly. Use online term plan calculators to estimate your yearly payment for the assured Rs. 2 crore sum.
While Rs. 2 crore term insurance makes complete sense considering rising inflation and nuclear families, here are some things to consider before purchasing such high coverage:
Despite their significant benefits, term insurance plans are often surrounded by various concerns and misconceptions that can deter potential policyholders from making informed decisions.
Term life insurance is known for offering flexibility and customisation options in several ways:
Policies can typically be purchased for terms ranging from 1 year to 30 years. This allows buyers to match the length of coverage to their specific needs, such as covering a mortgage or providing income for children until they become adults.
Buyers can usually select the death benefit, allowing them to purchase the protection they need. Coverage can often be increased or decreased as needs change.
Many term policies allow policyholders to convert to permanent life insurance within a specific timeframe without proving insurability again through a medical exam.
Term life policies may be renewable at the end of each term. This allows continued coverage as needed, though premiums increase over time.
Premiums can often be paid monthly, quarterly, semi-annually, or annually, allowing buyers to match payments to their budget.
The ACKO Life Flexi Term Plan is currently one of the most affordable and feature-rich term insurance plans.
You can choose a policy tenure between 5 and 40 years, depending on your needs. Longer tenures have lower yearly premiums.
You can receive payouts in a lump sum, monthly income, or a combination. This flexibility allows you to utilise funds better.
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Term insurance is the most affordable life insurance, covering risk at minimal costs. You can ensure complete financial protection for your family's future by choosing an adequate coverage amount. Considering rising inflation and higher nuclear family expenses, Rs. 2 crore is ideal for most earning members.