Term insurance provides financial support to the head of a family in case of death. Pure term insurance pays money only in case of death.
Term insurance can be seen as an investment that can help a family financially in the worst case scenario. The worst case here means the death of the person maintaining the house. This is such a situation when a mountain of sorrow falls on the head.
In such a situation, term insurance cannot reduce someone’s suffering but can save the family from financial difficulties. There is no return on pure term insurance, hence it is also cheaper. But it is most useful in times of need.
In such a situation, a question arises that how much should a person’s term insurance be? Will term insurance of Rs 50 lakh be enough or would it be better to take term insurance of Rs 1 crore? The needs of every family are different and term insurance should be purchased keeping in mind how its needs will be met after the departure of its guardian.
Insurance expert Sweety Manoj Jain says that it should be 20-25 times of a person’s income. At the same time, according to the website of ICICI Bank, term insurance can be purchased considering the human life value.
How much is term insurance?
According to the website of ICICI Prudential, term cover should be decided according to each age group. Term cover for people aged 18-35 years should be 25 times their salary, 20 times for people aged 36-45 years, 15 times for people aged 46-50 years and 10 times for people aged 51-60 years.
That is, if he is a 32 year old person whose annual income is Rs 8 lakh, then his term cover should be 25*8 i.e. Rs 2 crore. You can also take help of Human Life Calculator. You can also calculate term cover by adding your other savings. Click here to access the Human Life CalculatorClickDo it.
Is there term insurance?
If the head of a family dies and he has no savings, then life ahead can be very difficult for that family. The situation becomes worse when that person is the only earning person in the house. In such situations, term insurance comes in handy. There are two types of term insurance. First is pure term insurance and second is return on premium term insurance.
In the first one, a lump sum fixed amount is received on death during the term cover. You don’t get anything in case the term ends or you end it prematurely. It is very cheap. Return on Premium is a slightly expensive cover but on this you get money on maturity. Not only this, if an insured wants to terminate the term cover before maturity after 3 years, he also gets some amount as surrender value.
