Purchasing a life insurance policy is not just a financial decision but is also driven by emotional concern towards the family, right? As the family’s breadwinner, you would want to ensure the financial security of your family’s future even in your absence. When it comes to buying a life insurance policy, there are different types of policies that you can choose.
One of the most popular types of policy is the term policy. Under this policy, you get coverage against one of the significant risks – death for a specific period. In the event of your untimely death during this period, the insurance company pays the death benefit to the family member (nominee).
A term plan is a basic protection plan. You can purchase a term plan with a high coverage amount at an affordable premium. This means in the event of your unfortunate demise; your family will get a substantial amount in lump sum, which they can use to meet their regular expenses and maintain their lifestyle. However, if you survive the policy period, you do not get any survival benefits.
If you are looking for a life insurance policy that offers more than just death benefits, you can opt for a traditional policy with a savings and cash component. These policies allow you to accumulate a corpus over a period and get returns on the same upon maturity.
No matter the type of life insurance policy you choose whether a term plan or a traditional policy, it plays a vital role in protecting your family’s financial future. Let us know how?
If you are the only earning member in your family, the family may be financially dependent on you for necessities. In the event of your unfortunate demise, the pay-out they receive from the life insurance policy can act as an income replacement for them. The family can use the amount to pay off the debts (if any) and carry out the day-to-day expenses.
The term plan generally has a high sum assured, and the death benefit that your family receives can be used for many things, including paying for your child’s education. Additionally, if you have a policy that has a cash value, you may get valuable returns on the accumulated amount. You can use the amount through a loan or withdrawal while you are still alive to meet emergency expenses.
Do you hold any charitable cause dear to your heart, or do you have any favourite charity organisations? In either case, life insurance can be an excellent tool to leave a charitable legacy. You can make a substantial contribution to the charitable cause/organisation by designating them as a beneficiary for your insurance policy.
A life insurance policy can also supplement your retirement plan. Suppose you have purchased a policy with cash value. In that case, the pay-out you receive upon maturity can give you an additional financial cushion during your old age, and you can use the amount to meet your expenses post-retirement.
Most people believe that a life insurance policy is useful only after the person (insured or the policyholder) has passed away. However, some policies have optional benefits to help you get financial protection for terminal illness or disability. You can get the additional security by adding riders or add-on to your standard policy.
Final Word
Life Insurance is critical for your family’s overall financial well-being. In the event of your demise, the expenses can quickly pile up from funeral costs to managing the EMIs and keeping up with the daily expenses. With life insurance, you can have peace of mind knowing that your family will never face any financial hassles.
