It was a shocker for the Mehta family when Sachin Mehta, suddenly had a stroke and died, leaving behind his wife and two daughters. He was only 48-years-old and had no medical conditions. He was the sole breadwinner of the family, with his daughters still in school. His wife, Shilpi, was worried about how she would take care of the family in her husband’s absence, pay for her daughters’ higher education, their wedding, and even meet day-to-day expenses. To her relief, Sachin had already ensured that all these needs would be fulfilled even in his absence by buying a term plan.
The Mehta family’s story is a testament to a serious reality of life that the financial commitments of a family’s primary earners continue even after they are no more. There are still bills to be paid and financial obligations to be met, like school or college fees, EMIs on homes or automobiles or household equipment, etc. Other short and long-term goals and aspirations have to be funded too. Therefore, while the emotional loss of such individuals is immeasurable, the financial impact of their absence can also be devastating. Having adequate life insurance helps to tide over these commitments, ensuring that the grieving family does not have the additional stress of coping with a financial burden as well. This is where term insurance
What are Term Plans?
There are various types of life insurance policies out there. Broadly, they fall into two categories – plans that offer pure life cover and those that have life cover and an element of investment too. The first category, which offers plain vanilla life insurance, are called term plans. These plans entail payment of relatively small premiums in exchange for the pay out of a comparatively large insurance cover, in the event of the death of the policyholder. Being the most basic form of life insurance, term insurance is the most cost-effective form of life insurance.
For instance, the Bajaj Allianz Life Smart Protect Goal, a Non Linked, Non Participating, Pure Life Term Insurance Plan offers a 25-year-old non-smoking male a cover of Rs 1 crore for paying just Rs 18
per day. Interestingly, unlike classic term plans, this plan offers the option to enjoy numerous other valuable features too, like the return of the entire premium at the time of maturity2
, which is when the policyholder survives the policy term.
Need for Term Plans
The financial dynamics of a family undergo a drastic shift after the loss of an earning family member. Since this stream of income is discontinued, the family has to fall back on its savings and investments to meet its commitments. To begin with, more liquid assets, like bank account balances may be used to meet regular household expenses and EMIs. Then, perhaps, other financial assets like savings may have to be encashed and physical assets – like property, gold, etc. – might be sold. In dire cases, the family may even have to take loans to keep the stream of funds flowing.
Wouldn’t it be less destabilizing if the family were to receive a large corpus of funds, in the form of a sum assured from a term life insurance
that could comfortably take care of all these expenses for a considerable period? This could give the family the resources and time needed to manage their financial life, until another family member begins to earn or the existing finances, including the sum assured from the life insurance, are invested to ensure a regular stream of income.
Another relatable example can be of a family who may have purchased a home on a large loan, which requires them to pay considerable EMI every month. The loss of an earning member could give a blow to this outgo too. Rather than defaulting on the loan and perhaps losing the asset, or running up further in debt, wouldn’t it be a blessing to receive a sum assured from a term plan that is adequate to repay the entire loan? This would ensure that the family now owns the asset and the debt is completely paid off. This would certainly bring to the family peace of mind on the financial front, especially at a time when it has lost a precious loved one.
If you do not have a term plan and have some financial dependents, it is critical that you get one today. If you already have a term plan, ensure that the policy does not lapse.
How to ensure your term policy never lapses
Having a term policy is perhaps one of the simplest and most cost-effective way to ensure the financial security of your family, if you are not around to take care of them due to some unfortunate eventuality. The only miniscule effort required is to remember to pay the premium on time, to ensure that your cover does not lapse. A prompt to make payment can be easily automated by setting up a reminder on your personal device or initiating an auto-pay or standing instructions with your bank.
To facilitate policyholders, companies like Bajaj Allianz Life Insurance have made premium payments quick and easy by offering various online payment options. The policyholder simply has to provide the registered mobile number or the policy details and the payment can be made through various online methods as made available. You can also register for Auto Pay to ensure timely payment of renewal premium to get your Life Goals Done.
Having this automation in place will enable you to stay confident that your term insurance policy is intact. More importantly, you can rest assured that your family will always be financially secure.
 This premium is considering Male aged 25 years | Standard Life | Non-Smoker | Life Cover Variant | Policy term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Annual Premium Payment Mode | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only.
Product feature/benefit mentioned above are dependent on variant chosen
The pages slugged ‘Brand Connect’ are equivalent to advertisements and are not written and produced by Forbes India journalists.
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