TERM INSURANCE PLAN - The True Meaning of Insurance
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Posted On :
Oct-01-2014
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Article Word Count :
745
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Life insurance industry assumes your responsibilities of providing for your family, as planned even in your absence. Your family’s financial security should be assured under all circumstances.
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As the primary breadwinner of the family, you are responsible for shouldering the grand dreams you have envisioned for your family. In the eventuality that your family is forced to adapt to a world without you, they should be free of any additional burden of financial worries at that time.
Life insurance industry assumes your responsibilities of providing for your family, as planned even in your absence. Your family’s financial security should be assured under all circumstances.
All you need to do to secure your family’s future is:
• Work out the amount of life cover you need considering your income, your family’s living expenses and your financial commitments towards your family
• Estimate the time period over which your family would be financially dependent on you
The inherent meaning of having an insurance cover can be realized by buying a pure risk cover that is more commonly called ‘TERM PLAN’ in insurance lingo. A term plan is the most basic and apt plan in the life insurance category .Having an appropriate plan is as important as is the air we breathe.
Under this plan, the policy holder pays a certain amount of premium each year for the insurance cover he desires for a specific period. The period is called the ‘TERM’ of Insurance.
In a term plan, an individual pays only for the mortality charges that are incurred to cover the risk of an eventuality and the sales and administration charges that are incurred for operational purposes. These charges are together termed as ‘PREMIUM PAYABLE’ on the plan. Higher the insured amount, higher is the annual premium. Also, the younger the policy holder is, the lower is the premium.
The policy holder never gets the money back during his life time. Only the nominee of the policyholder is entitled to receive the money, if the policy holder dies before the term of the insurance expires.
The advantage of this plan is, it is the cheapest way to get insured i.e. you can get the high risk cover by paying a comparatively minimal premium.
WHY TERM INSURANCE / PROTECTION PLANS:
Protection plans help you shield your family from uncertainties in life due to financial losses in terms of income that may dawn upon them in case of your untimely demise or critical illness. They are all the more important if you are the chief wage earner in your family. No matter how much have you saved or invested over the years, sudden eventualities such as death or critical illness always tend to affect your family financially apart from the huge emotional loss.
For instance, consider the example of Mr. Ravin who is a healthy 25 year old guy with a income of Rs. 1,00,000/- per annum. Let's assume his income increases at a rate of 10% per annum, while the inflation rate is around 4%; this is how his income chart will look like, until he retires at the age of 60 years. At 50 years of age, Ravin’s real income would have been around Rs. 10, 00,000/- per annum. However, in case of Ravin’s unfortunate demise at an early age of 42 years, the loss of income to his family would be nearly Rs. 5,00,000/- per annum.
However, with a Protection Plan, a mere sum of Rs. 2,458/- (approx.) annually (inclusive of service tax & educational cess) can help Ravin provide a financial cushion of up to Rs. 10,00,000/- for his family over a period of 25 years. (Note: The premium amount is an approximate figure from one Pvt. Life Insurance Co. to illustrate. However, it will differ from Company to Company.)
Having understood all from the above, I want to conclude saying:
Life is about moving forward, and as you scales new heights towards success, your income rises. Along with it, your lifestyle changes and so do the needs and expenses of your family. So, requesting you to secure your family financially with the range of protection plans that take care of your long-term and short-term requirements – at a fraction of the cost. After all, “YOUR FAMILY’S HAPPINESS IS PRICELESS”
(Written By Manju Dhake- Principal Officer Insurance)
Disclaimer:
• Insurance is the subject matter of solicitation
• The views in the article are personal.
• The figures mentioned above are for illustrative purpose to explain the concept
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Article Source :
http://www.articleseen.com/Article_TERM INSURANCE PLAN - The True Meaning of Insurance_305153.aspx
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Author Resource :
Ms. Dhake heads the Insurance business for Sushil Insurance Brokers Pvt. Ltd in the capacity of Principal Officer.
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Keywords :
Term Insurance, Why Term Insurance, Life Insurance,
Category :
Finance
:
Insurance
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