In financial planning sessions, the topics that are discussed mostly involve investments, savings, and returns. However, there is one crucial element that must be discussed prior to these talks: protection. Protection from that one thing in life which we cannot predict or control. It is precisely why term insurance is important, and why the top financial planners always consider it as the one insurance type needed by every income earner.

Term insurance does not have a complicated structure. Term insurance means coverage for your loved ones if ever you die within the duration of your coverage. No investment, no maturity payment; simple but efficient protection at a very affordable price. Unfortunately, many income earners are either under-insured or do not have any term insurance at all.

The Core Reason Why Term Insurance Is Important

Think about how the rest of your family will manage without your earning. The home loan EMI must be repaid. Tuition fees have to be met. Basic necessities like grocery purchases and paying utility bills do not wait until after the death of the person who earns the money for the family.

This is exactly what term insurance can help you avoid. The lump sum benefit ensures that the finances of your family members are sorted out after your death and that they do not have to resort to desperate measures just to meet the basic requirements.

And that is exactly why term insurance matters. It is not about you. It is about your family members.

Pure Protection at an Unmatched Price Point

One of the most attractive features of the term insurance plan is the affordability that it offers. Since there is no element of investment associated with the term plan, the cost of the insurance coverage offered is much lower than any other type of life insurance plan available.

An individual who is physically fit and in his/her late 20s or early 30s could easily get an insurance coverage of one crore rupees or higher with a monthly premium that is far less than what one would spend on dining out. This makes the process of availing adequate insurance cover absolutely feasible.

The most foolish thing one can do from a financial point of view is to wait to purchase term insurance. Delaying in purchasing such insurance coverage leads to increase in premiums and possibly deterioration in one's health profile.

How Much Cover Do You Actually Need

Knowing the importance of term insurance also requires understanding the process of determining an appropriate cover. Unfortunately, most individuals purchase a cover that seems big but does not have any basis on how much you really require. 

To effectively calculate a suitable cover, consider your yearly salary and how many years of income your family will need to replace, your liabilities such as mortgage payments, car financing, and other debts, your child’s education fees and costs involved in their wedding, the requirements of your partner upon retiring, and the current financial position that can augment the benefits of your investment.

Financial experts recommend a minimum cover worth ten to fifteen times your annual earnings. With this amount, you will be able to get adequate returns from investments, which will enable your family to live comfortably from the returns rather than using up all the money.

Additional Riders That Strengthen Your Coverage

An essential term plan in itself gives adequate protection. However, by including certain riders, one can enhance the protection further. Some important riders are as follows:

• A critical illness rider which will pay out the claim amount upon detection of any life-threatening illnesses such as cancer and heart disease

• An accidental death rider, which pays out additional benefits over and above the sum assured in the event of death due to an accident

• The waiver of premiums rider, whereupon becoming totally disabled, there is no need for further premiums to be paid for continuation of the policy

• And the income benefit rider, under which the sum assured is payable as a monthly income

All these are important riders which come at a low cost.

Protecting Everything You Have Built

All the money that you earn, all the EMIs that you pay, all the sacrifices that you make for the sake of comfort of your family and their future must be kept safe. Term insurance is the most effective, cheapest and easiest way to ensure that none of it falls apart after you pass away.

Insurance Guru is there to help people realize the true importance of term insurance and help them get the appropriate insurance policy at the right coverage amount with suitable riders for them.