When we are young, we don't think about death as something we need to plan for or even deal with. However, as you begin to shoulder more and more responsibility, the need for a back-up plan gains prominence.
Providing financial protection to your family often forms the basis of your back-up plan. It is in this context that a simple form of insurance called a Term Plan becomes very important. A term plan is an insurance tool that offers financial protection in the form of a sum assured to your family members if something unexpected happens.
Most term plans offer a variety of solutions tailored to fit a variety of situations. Here are a few steps to help you identify the right Term Insurance Plan.
1. I am looking for the old fashioned, no-frill insurance-If you want plain vanilla insurance, choose a plan with single premium options that offers your family the assured lump sum amount after your death. The policy's sum assured should be at least 15-20 times your current annual income.
2. Accident cover would be a plus: If you are willing to go a little bit extra, get Accidental Death Benefit. Accident cover can add a large benefit at a low cost and can protect you against a range of uncertainties such as road accidents, by offering stretched-out benefits to your family in addition to lumpsum payment.
3. My family has a history of critical illnesses I want to be insured against: Contrary to what you may have heard, health Insurance only compensates you for hospitalization expenses based on actuals; it doesn't secure you against major illnesses which cost a lot to deal with as soon as they're diagnosed. Thus, if you have a family medical history of critical diseases such as Cancer, it's important you get financial protection in the form of a Critical Illness rider on a term plan.
