In India, owning a car or bike is often seen as a symbol of freedom and comfort. However, financial security is the most critical element in an unfortunate occurrence. Car insurance guarantees you confident driving and shields you from financial losses resulting from accidents. It provides peace of mind, covering losses, liabilities, and unanticipated costs. However, while car insurance secures your vehicle, term insurance safeguards your family's financial future. It provides a lump sum payout in case of an untimely demise, ensuring your loved ones remain financially stable even in your absence.
What is Term Life Insurance?
Term life insurance is a policy that provides coverage for a specific period, usually between 10 and 30 years. If the policyholder passes away during this term, their beneficiaries receive a death benefit as a lump sum. This payout can help your family cover essential expenses, pay bills, and maintain their lifestyle, offering them financial stability during a challenging time.
Example of Term Life Insurance
Suppose Shivam is 35 years old and wishes to buy a 20-year term life insurance policy of ₹50 lakh. Shivam has his family: his wife and two young children of very tender age. He also pays ₹ 20 lakh home loan.
Shivam purchased the policy, and during its active term, he tragically passed away in an unforeseen accident. The beneficiary, his wife, received the ₹50 lakh death benefit.
Here's how the money can be used:
1. Covering Daily Expenses: The money provides Shivam's wife financial stability to manage household expenses and pay various bills.
2. Re-Paying the Home Loan: The policy proceeds can help clear Shivam's home loan, ensuring no loan liability is left on his family.
3. Securing Children's Future: The remaining ₹30 lakh can be invested in children's education, saving for their higher education and ensuring their future.
Why Vehicle Owners Should Consider Term Life Insurance
Owning a vehicle comes with responsibilities, and one crucial aspect often overlooked is financial protection for your loved ones. Here's why vehicle owners should consider term life insurance:
● Financial Security for Your Family: A fatal crash will create financial problems for your family. Term life insurance is a protection tool that makes funds accessible to cover family living costs, child education expenses, and other necessary expenses.
● Affordably Premium: People can access valuable term life insurance coverage at affordable premiums compared to whole life insurance options. The affordable premium structure enables you to obtain generous protection amounts as a cost-efficient way to obtain financial security.
● Coverage for Liabilities: If you financed your vehicle through loans, term life insurance covers your liabilities. This means your family can repay all debts and leave no financial burdens behind.
● Peace of mind: Knowing that your loved ones are financially protected will enable you to enjoy your rides with greater peace of mind.
Choosing the Right Term Life Insurance Plan When selecting a life insurance plan, consider the following factors:
● Coverage Amount: The insurance amount should be sufficient to repay outstanding debt and cover children's education while paying for necessary living expenses.
● Policy Term: Choose a term that is suitable for your financial obligations. For example, if your mortgage is 20 years old, a 20-year policy term is suitable.
● Insurance Company Reputation: Look for an insurance company whose claims settlement ratio is good since these companies are dependable and financially sound.
● Additional Riders: You should consider additional coverage riders to protect against critical illnesses and accidental death.
Conclusion
Considering the high number of traffic accidents in India, vehicle owners should explore term life insurance as an added layer of security. A well-chosen life insurance plan offers peace of mind and establishes financial security by protecting your loved ones from future unknowns.
