Term insurance is a crucial financial tool for high-net-worth individuals (HNWIs) in India. A high-net-worth individual (HNWI) is someone with a net worth above a certain level, often starting at several crores in liquid assets. This term is widely used in the financial services industry to categorise wealthy individuals. In this article, you will learn the significance of term insurance for HNWIs, the benefits of term insurance, and more.
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Term life insurance is a pure form of life insurance that provides coverage for certain years. Coverage periods vary; they could be 10, 20, 30, or more years. If the insured passes away during the term, the insurance company provides a large payout to the designated nominees. Term insurance has no cash value components, making it an affordable option for many.
There are numerous reasons why people with high net worth need term insurance. Some of the key reasons include:
High-net-worth individuals do have financial obligations despite their wealth. Complex financial portfolios, tax responsibilities, business loans and lifestyle maintenance that come with wealth are some of the few reasons. Having the right term plan ensures that these liabilities do not burden family members in the event of an HNWI’s demise.
For business owners, it's essential to determine how much coverage is needed to ensure business continuity and support partners in managing the business after an HNWI’s death. A financial advisor can help assess these factors to ensure the appropriate amount of coverage is in place based on individual circumstances.
Assess dependents' financial needs, including education costs, living expenses, and future financial goals.
Estate planning is essential for HNWIs. Term insurance can help cover estate taxes and ensure assets are passed on to their heirs without financial strain.
This coverage is essential for protecting wealth and ensuring that loved ones have financial stability in their absence.
Among all the advantages of having a term insurance plan, the four key benefits include:
Term insurance typically has lower premiums than whole life insurance. This allows HNWIs to allocate the savings toward other investment opportunities.
Most term insurance can be customised according to the requirements of HNWIs or their families. The flexibility to increase the coverage amount and policy duration makes adjusting to changing financial situations and family needs highly advantageous.
Premiums paid on term insurance may qualify for tax deductions under Section 80C of the Income Tax Act. This directly benefits HNWIs in terms of taxes.
Securing a term insurance policy provides invaluable peace of mind. This security allows them to concentrate on wealth accumulation without the added stress of potential financial uncertainties.
ACKO Life Flexi Term Plan delivers a modern, flexible, and customer-centric solution for long-term financial protection. It provides a unique level of policy flexibility unmatched by most traditional insurers. With ACKO’s fully digital policy management system, policyholders can easily make any policy adjustments (endorsements), such as:
Term insurance is a critical part of wealth planning for high-net-worth families. It serves various purposes, including preserving wealth and financial stability for future generations. Above all, it provides immense peace of mind. Given the unique challenges that come with substantial wealth in an HNWI’s life, knowing loved ones will be well taken care of can make a world of difference.
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