Preparedness gives us the confidence to take risks. These risks can pay off and lead you to a better future. However, balancing these risks can make you better at the game of personal finance management. One of the ways is to have a portfolio that contains investments in equity and mutual funds, debt for hedging the risk, fixed-income investments like FDs, and wise investment choices like term plans.
A term plan is a life insurance policy that gives you a more significant coverage amount for your sum assured. The premiums are quite affordable, contrary to health insurance. You can get a term plan for longer tenures, i.e., up to 40 years. These long-term plans are designed to create a better financial plan for your family. The policy for your term plan provides the sum assured only after the policyholder passes away. This sum assured for term plans can be availed of in a lump-sum manner or annually/monthly. It allows your family and dependents to take care of their lives after you pass away. Children can focus on their education and build their future; your spouse can lead their life without compromising or worrying about their future or savings, and your parents are assured about their safety and security.
Let’s cover ways in which you can leverage a term plan for critical situations:
1. Planning: Visionaries get rewarded for their forward thinking. Want to be visionary about your finances? Plan forward, get a term plan, invest wisely, and create an emergency fund.
2. Add riders: Just like you can customize your ice creams with toppings and everything, garnish your term plan with riders. These can come in handy in times of crisis. They allow you to turn off your worries and can save your finances during critical illnesses, permanent disability riders, and many other situations.
3. Know your needs: Most of the planning process starts with understanding your goals, where you want to be in life, and what your needs are. If you can identify these correctly, you can create better plans for the future. Making better plans will help you in execution and will allow you to make long-term plans that best suit the needs of your family and loved ones. From the tenure, the sum assured need, the riders, and everything else can be planned wisely.
4. Choosing the best long-term plan: A long-term plan is a long-term decision. Its impact is measured by how easy it makes your life in the future. Choosing a sound insurance service provider, a comprehensive policy, comparing the policies and plans, checking the claim settlement ratio, and how it fits with your intended needs can make the decision process simpler.
Read the above four points carefully. Begin by understanding and acknowledging that a need for a term plan exists. Then, consider the type of plan, tenure, and any needs you may have. If needed, seek advice from an expert and get insured to prevent your finances from dwindling during critical situations.