Is 1 crore term insurance enough for your lifestyle?
You may be tired of hearing how fickle life is, how every moment is fleeting, and no one knows what tomorrow will bring. Sadly, it is the truth. Nothing is constant in this world except the irony of change. Therefore, you need to prepare for whatever may come your way.
If you are the primary breadwinner in your family or even one of the providers, you already know the huge financial burden of maintaining a household. It takes work. And, with the threat of changes in life looming overhead, it is difficult not to worry about the people you may leave behind.
No one can control or avoid premature or untimely demise in the family, what with the change in environment, lifestyle, etc., these days. Your family will be grief-stricken, and then the billers come knocking. In such times, term insurance payouts are a Godsend.
What is Term Life Insurance?
Term life insurance is a policy plan that offers numerous advantages to the insured and their beneficiaries. Simply put, it is a life insurance plan wherein if there is an unexpected and untimely demise, the beneficiaries receive a huge payout from the insurance provider, granted you make the premium payments on time during the tenure of your term insurance. It is unfortunate for the family to lose someone they love, and at such hard times, it helps them have the financial support they need to cope with running the household, paying bills, and planning for the future.
Depending on the plan you choose, term insurance benefits may vary. You can choose the tenure of your term life insurance anywhere from 10 to 100 years. A 100-year policy is a full life insurance. You have the option to choose the sum assured with your policy. It can range from INR 50 lacs to crores in the double digits.
You can choose from various term insurance benefits with a base plan or add riders to your policy. The base plan is the sum assured, which your beneficiaries will receive. You can also choose bonus plans that pay you large sums of money regularly or as investment payouts.
Here are some of the coveted term insurance benefits:
- Affordability – The premium plans on term insurance are quite affordable. Let’s assume you buy 1 crore term insurance for a 10-year tenure. You can set a yearly premium payment plan which remains constant for the entire tenure of your policy.
- Tax deductible – Premiums paid towards life insurance policies are tax-deductible to an upper limit under Section 80C of the Income Tax Act. So, if you have a maturity benefit on your term insurance plan, then not only do you refrain from paying taxes on the amount spent in securing your family’s future, but you also receive a huge sum of money at the end of your tenure. It is like an incredibly beneficial savings plan.
- Financial security for beneficiaries – It is hard enough to lose a loved one. Your family does not need the grief of dealing with loans, mortgages, or even household bills without a steady flow of income or during trying times. Even the popular 1 crore term insurance is most welcome to help your family survive and sustain. They can plan for children’s education, business, paying off debt, or whatever they may require.
- Perks of diverse plans—Apart from the usual 1 crore term insurance policy for the death benefit, you can also opt for plans that pay a certain sum periodically during the tenure.
- Bonus plans – You can opt for a participating 1 crore term insurance with bonus plans wherein your premium is segregated for two purposes. One portion is utilised to build your sum assured for the claims, while the other is used to invest in the market or other investment opportunities. The insurance provider pays you bonuses that you can receive every month. Endowment plans and ULIPs are two such policies that add term insurance benefits.
- Money-back plans – You can also opt for guaranteed payouts on your sum assured during your tenure with money-back plans. These term insurances pay you a fixed sum of money at a predetermined interval, and once the policy matures, you will receive the remaining amount. However, in case of untimely demise, the insurance provider pays the entire sum assured to your beneficiaries.
- Riders—In addition to your base plan, you can add riders to your term insurance policy. These riders can increase the sum assured, receive claims in cases where you may be diagnosed with critical illnesses, receive accident benefits, etc.
The sum assured needs to befit the needs of your beneficiaries. Term insurance benefits can be reaped during your life and offer financial support to the family after a tragic death.
Is 1 crore term insurance enough?
A 1 crore term insurance plan is sufficient with proper financial planning. Opting for a 1 crore term insurance as part of a participating endowment plan allows you to receive returns on your investment. The same goes for ULIPs or Unit-linked Insurance Plans that invest your money in the market and pay you substantial bonuses. These amounts can be treated as additional monthly, quarterly, or yearly income based on the specifications of your policy.
Aside from riders that help enhance the coverage and protect your interests in cases of unforeseen medical dilemmas, choosing term insurance benefits on the base plan that extend beyond the death benefit can prove advantageous. When planning your term life insurance to reap financial benefits on multiple fronts, 1 crore term insurance is enough.
Of course, the amount won’t suffice to take care of your family for the rest of their lives, but a huge sum of money will help them slow down and consider their options. They can pay back huge debts, arrange for growth and development, plan to start a business or invest the money to live off the interest as they see fit. It can be an adequate startup fund.
Conclusion
Term life insurance is a financial tool that offers you and your family multifaceted benefits. The sum assured you need to maintain the household purely depends on the family’s lifestyle. While a 1 crore term insurance payout is not a small amount, it may not seem enough for those who live lavish lives. In such cases, you can opt for a higher sum assured. Of course, the premium would differ accordingly, but it is hard to put a price on your family’s well-being.