Seeking safety and security in life is one of the most basic human instincts. According to an American psychologist Abraham Maslow’s hierarchy of needs, once our physiological needs are relatively satisfied, our safety needs take precedence and dominate our behaviour. These safety needs include personal, emotional and financial security along with health and well-being and protection against accidents/illness and their adverse impacts. This natural urge to take measures to mitigate risk becomes even more persistent if you have dependents who rely on you for their needs and financial security. One financial product that helps ensure complete protection against the uncertainties of life, creating an environment where you can take risks and stretch and grow, is insurance. Among various insurance plans, term life insurance is considered the most affordable and effective way to secure the financial future of our families and loved ones who depend on our income to maintain their quality of life and to fulfil their financial dreams. However, as with most things in life, there is no one-size-fits-all solution when it comes to term insurance. A combination of various factors including your age, income, financial needs and life goals makes everyones term insurance requirements unique. As a result, insurance companies have started offering new-age term insurance policies which come with a host of additional benefits and provide a scope for customisation. With us, you can tailor a term insurance plan that addresses your unique financial security needs, depending on your individual preferences, situation and requirements.
Getting the tenure right
The primary function of term insurance is to act as an income replacement in case of untimely demise of the policyholder, and therefore, it is crucial to aptly determine the tenure of your plan. The term of your policy will depend on a lot of factors such as your age, till when do you need to support your dependents and when you plan to retire. In most cases, it is recommended that you a policy term lasts at least till your retirement age. There is no point in purchasing term insurance for a short tenure that will end before your retirement when you still have financial liabilities and dependents on your income.
Finding the correct sum assured
Term insurance policies provide an assured death benefit in the form of the sum assured paid to the family which can help them meet for day-to-day expenses, as well as future expenses such as child education and marriage. While it is not possible to determine your familys future requirements down to the penny – it should be more than adequate to settle your existing financial liabilities such as home loans, maintain the current lifestyle and fulfil of the future aspirations of your family. In order to ensure that financial vulnerabilities do not cause a setback in keeping your family secure and making their dreams come true under any circumstances, you should also factor in the impact of inflation when deciding upon the cover.
Topping up benefits
While most of us are aware of the reliability of term insurance plans, few know about riders which help you customize your policy to meet your needs and budget, and expand the benefits of your policy at a little extra cost. These riders provide you financial protection from uncertain and unforeseen risks in life during which even a term insurance plan may not be of much help. Basically, a term rider is an add-on you can attach to your existing term insurance policy for additional benefits over and above the pre-decided sum assured of your policy, in case a scenario that is covered by the rider occurs. Rather than going through the hassle of buying a new policy altogether for different risks, riders let you customise the benefits, thereby maximising the value of your current term insurance policy.
Some examples of term riders include:
Critical illness rider which enables you to have access to a portion of your sum assured if youre diagnosed as terminally ill with diseases like cancer, heart attack, kidney failure or paralysis.
Disability rider provides you with a benefit if you become disabled due to an accident or sickness. Usually, 100% of the sum assured is paid upon loss of both limbs or loss of eyesight, and up to 50% is paid upon loss of speech, loss of hearing in both ears, or loss of use of any one limb. This rider also waives off any further premiums on the base plan upon disability even as your policy continues to remain active.
Accidental Death rider provides payment in addition to your policys face amount in the event of your accidental death, which can be equal to the sum assured of the policys base plan.
Waiver of Premium rider enables you to forgo any further premiums to be paid in case of a critical illness or disability.
We live in a world of customization and personalisation. For those who want to keep risk covers in one place or with a single insurer, they must opt for riders that are useful for them. However, evaluate the need for each specific rider rather than opting for them merely because of a low premium. You should always pick a policy that meets your requirements and protects your familys financial future while keeping you at the centre of it all.