In today’s uncertain and ever-changing world, ensuring the financial security of your family is not just a smart choice—it is an absolute necessity. Life is unpredictable, and while we cannot control what the future holds, we can certainly prepare for it. One of the most reliable and cost-effective ways to safeguard your loved ones is through term life insurance.
Term insurance is a pure form of life cover that provides a substantial sum assured at surprisingly affordable premiums. Unlike other investment-heavy products, its primary purpose is protection—ensuring that in the unfortunate event of your untimely demise, your family will not have to struggle financially. It becomes their safety net, covering major expenses such as children’s education, household needs, outstanding loans, or even long-term commitments like retirement planning for your spouse.
In essence, term life insurance is more than just a policy—it is a promise. A promise that even if you are not around tomorrow, your love and responsibility will continue to protect and empower your family. Simple in structure, powerful in purpose, and invaluable in impact, term insurance is the foundation of a stress-free and secure financial future.
Assess Your Needs – Risk Cover Amount
Select the right policy tenure
Another important factor is the duration of the term plan. Ideally, the policy should cover you until you reach financial independence-that is, when you have enough assets or savings that your dependents won’t need an insurance payout if something happens to you.
A term policy is a contract for a specific period, and if you outlive it, you don’t receive any payout. The ideal term should cover your primary earning years and key financial responsibilities.
Most people in India opt for coverage until age 60 or 65, coinciding with retirement. However, some term plans allow coverage up to the age of 75 or even 85. Be mindful, though-longer tenures come with higher premiums.
How to determine this – is by asking yourself:
- When will your children become financially independent?
- How long will your family depend on your income?
- Will you have significant savings by a certain age?
Choose a policy term that adequately matches your life stage and responsibilities. This ensures that even if something were to happen to you, your family would have a safety net until they can stand on their own feet.
Do Not Hide Health or Lifestyle Information
Life insurance is based on the principle of “utmost good faith.” This means you must disclose all relevant information to the insurer, especially regarding your health or lifestyle. Always be honest while filling out your proposal form. Hiding a pre-existing medical condition, smoking/alcohol habit, any other health-related information, existing insurance policy or a rejected proposal, can impact your new policy.
Be honest and transparent. If you’re a smoker, declare it. If you have a history of diabetes or high blood pressure, mention it. Insurance companies assess your risk profile based on the information you provide. While it might slightly increase your premium, it guarantees that your family’s claim will be honored when they need it the most. Hiding facts may lead to denial of claims later, defeating the entire purpose of buying insurance.
Expand the cover with add-ons/riders
Basic term life insurance covers death due to natural or accidental causes. But additional protection can be obtained through riders-add-on benefits that enhance your base policy cover for a minimal additional premium.
Common riders include:
- Critical illness rider: Pays a lump sum on diagnosis of serious illnesses like cancer, heart disease, etc.
- Accidental death benefit rider: Pays an extra amount if death occurs due to an accident.
- Waiver of premium rider: Waives future premiums in case of permanent disability or diagnosis of critical illness.
Consult a Professional
While term life insurance may appear simple, making the right choice requires professional guidance. The complexities of identifying the need for life insurance & process of getting one requires help from an expert. Consulting an insurance sale person can help you:
- Customized Needs Assessment: An advisor will go beyond the basic calculations and understand your specific family dynamics, income patterns, and future aspirations to recommend a policy that is truly customised to your needs.
- Understand Policy Terms & Conditions: Insurance policy documents can be dense and filled with technical jargon. An expert can help you understand the exclusions, riders, and terms and conditions, ensuring you are fully aware of what you are buying.
- Claim Settlement Assistance: In the unfortunate event of a claim, an advisor can provide crucial support to your family, helping them with the documentation and processes, and ensuring a smoother settlement experience.
- Informed Decision Making: An Insurance sales person can help you compare different policies from various insurers based on their policy benefits, add-on riders, claim settlement ratio, empowering you to make an informed decision rather than just choosing the cheapest option.
Summary
Buying a term life insurance policy is a long-term commitment and a crucial step towards securing your family’s financial future. By adequately assessing your life cover, choosing the right policy term, being transparent about your health, getting rider/add-ons, and most importantly, consulting a professional, you can ensure that the policy you buy provides the security and peace of mind you intended it to.
However, while affordability matters, don’t make price (premiums) the only deciding factor.
