How to Plan Life Insurance for My Family?
Here are three ways an individual can provide for his family’s financial well-being:
Opt for Term Plans
Being the most basic form of Life Insurance, term plans are a no-brainer when it comes to securing the family’s finances. Term insurance provides pure risk cover, which explains the lower premiums. A fixed sum of money - the sum assured - is paid to the beneficiaries if the policyholder expires over the policy term. If the policyholder survives, there is no pay out.
Term plans, have several features that make them very useful for someone looking at securing theirfamily’s future. One can attach riders to the term plan. So if let’s say there is a critical illness rider, the policymaker is entitled to receive the sum assured on being diagnosed with the critical illness. This is in addition to the death benefit of an equal amount should he die over the term of the policy. Likewise there are other riders like disability cover, loss of employment cover, among others. The policyholder should select riders based on needs since they can add considerable value to the life cover.
Another feature offered by term plans of certain insurance companies is the flexibility to enhance the life cover during critical stages of the policyholder’s life. For instance, an insurance company may allow policyholders to enhance the life cover by 50% at the time of marriage and by 25% at the time of turning a parent.
Go for Child Education Plan
Another plan the individual must consider is a Child Education Plan. As the name suggests, the plan provides for your child’s higher studies. In the absence of the breadwinner, the child’s education needs are taken care of without putting undue pressure on the family’s finances.
Take Loan Cover
Since many individuals have taken a loan at some stage in their lives, it is important that they provide for the liability. In the absence of the breadwinner, it will be upto his dependents to pay the remaining loan amount. This could place considerable amount of burden on the family’s finances, especially if it’s long-term in nature like home loan for instance. Hence taking a home loan cover is important. In the absence of the policyholder, it can protect the family from the liability as the insurance cover can settle pending EMIs (equated monthly installments).
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