Whenever you buy any electronics goods like TV, Fridge, Washing machine etc, do you ask for a warranty? Not only for expensive things, we even ask for a warranty while buying simple things like shoes, bags etc.
Why do we look for any assurance or guarantee? Because before we spend our hard-earned money, we want to make sure that if anything goes wrong with that product in a given period we don’t have to pay extra to get it fixed.
Does that mean we wish for any damage to a product we are going to own? Of course not. We just want to be prepared for any unexpected events or more precisely to avoid any unexpected expenses.
We consider risk factors before any new purchase but unfortunately, we hardly care about the risk associated with our life. We are so busy with life that we have taken for granted our life forever. But this pandemic has changed some of my notions.
Why did I buy Term Insurance?
Like many others I have lost many close friends and relatives in this Covid time. I am extremely sorry to share a miserable incident that happened during this pandemic. I have lost one of my friends due to covid, unfortunately he was the only earning member in his family. He left his younger sister and old mother in a devastating situation with no financial security. They have not only just lost their family member but also lost the only monetary source.
I am sure that this is not a one-off scenario. Similar accidents happened to many other families. This event has shaken me deeply. This becomes evident that I don’t know what is going to happen tomorrow, but is there anything I can do to make sure in my absence things will not fall apart. This directed me to buy Term Insurance.
What is Term Insurance?
Who should buy Term Insurance?
Is there any single person whom you care about and is solely dependent on your earning?
If you already have a huge savings which is sufficient for your dependent survival without any additional amount, you may skip buying this. Having said that, it is always good to be aware of the other options.
Why is Term Insurance underrated?
Even though this is a low premium insurance policy, we refrain from buying such policy. Whenever we spend money, we try to estimate the value we are getting in return. Thus, we decide whether it is worth spending that amount. In the case of Term Insurance, we don’t get any money back if we survive beyond the time period. And nobody wants to die early or predicts their own early death. Hence, they don’t feel it's worth spending for Term insurance.
First of all, we have to break our idea about life insurance. Even though we consider life insurance as an investment plan and put our savings for a higher return. But sadly that is not the purpose of insuring life. The main objective of insurance of life is someone insuring to pay a sum of money upon the death of an insured person to the nominee.
Things to consider before buying Term Insurance
Once you decide to obtain insurance, it is very crucial to decide on the sum assured and term period.
Term Period: Deciding the term period is a little bit easy. If you are a service person, you fairly know till what age you will be doing your job and most of the cases it is 60-65 years. Or you might be aware till what age your family will depend only on your income.
Sum Assured: You have to forecast the amount your family would require to maintain a similar lifestyle. You should also take in consideration of certain facts like disease/illness, kid’s education etc. You also have to make sure you will be able to pay the premium regularly. If you fail to pay and policy gets terminated because of that, you will lose all the benefits.
Bonus Tip
You are not done after buying insurance and paying premiums. Please make sure to share this information with some of your family members, so that they are aware that they are financially secure and they can reach the concerned company in your absence. I know this is very obvious. But there are cases where family members were not aware of the policy and missed the actual benefit they were supposed to get.