The youth of today have a tremendous responsibility to meet the increasing stress of economic inflation. Young breadwinners face the never ending struggle of finding new ways to meet their current financial needs while setting up for their future as well as that of their loved ones.
Insurance is one of the surest ways to breathe a sigh of relief in the knowledge of securing your loved ones’ future. You can also use it to elevate your net worth by choosing the right type of life insurance at a reasonable premium.
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What is term insurance?
Term insurance is a reasonable and affordable form of life insurance that you can avail of to secure the future finances of your loved ones in the event of your demise. You can protect your family with a sufficient sum assured that is paid as the death benefit. You can select a suitable tenure for the policy and avail yourself of the benefits for a reasonable premium.
You can choose from different types of term insurance based on your financial requirements:
- Increasing term insurance that increases the sum assured annually.
- Decreasing term insurance allows you to reduce liabilities throughout the tenure of your policy.
- Single premium term insurance is where you can secure the policy with a single lump sum payment.
- Return of premium on term insurance that allows you to build a corpus if you survive the policy tenure.
You can choose the type of term insurance that offers the benefits you most desire for yourself and your loved ones.
Why a 1 crore term insurance is perfect for the young?
The sum assured of your term insurance policy must suffice to take care of your loved ones in the future. While you can choose from varying amounts of sum assured, a 1 crore term insurance ensures that in the event of your unfortunate demise, your loved ones will receive a lump sum amount of money to cope with their finances.
Young breadwinners have multiple opportunities to earn sufficient income. You and your loved ones may grow accustomed to a certain lifestyle. A 1 crore term insurance ensures that they can continue with their lifestyle without major compromises.
A 1 crore term insurance guarantees a death benefit of INR 1 crore. It is a massive amount of money that can help your loved ones repay outstanding liabilities such as debts, mortgages, etc. and still have enough left over to support themselves.
The higher sum assured of a 1 crore term insurance also helps beat the rate of inflation. Based on your policy tenure, if the death benefit is paid after, let’s assume, 10 years, then the value of INR 1 crore could seem much less than when you purchased the policy. However, due to it being a sufficient settlement, your loved ones will be able to cope with the reduced value of the amount.
If a 1 crore term insurance doesn’t seem enough to support your family or your loved ones in the future, you can also opt for higher amounts. For young breadwinners with higher net worth, a 5 crore term insurance may be more appropriate.
Choosing the right coverage for term insurance
Determining the right coverage for term insurance to protect the financial needs of your family requires you to evaluate certain factors, which are as follows:
- The income vs expense factor that impacts the livelihood of your household. The more expenses you incur, the higher the sum you need. Therefore, you can choose from 1-5 crore term insurance policies.
- The liabilities you have include debts, loans, mortgages, car payments, vehicle insurance, business expenses, and more.
- Your loved ones’ financial goals include building a business.
- Life goals of your loved ones include education.
- Life stages of your loved ones include marriage, children, parents’ retirement, and more.
- The rate of inflation that affects the value of the settlement.
Based on these factors, it is recommended to avail of as high a sum assured as affordable. You need to plan for your loved ones’ finances in the future and ensure that you can cope with the premium payments based on your current financial plans.
Conclusion
A 1 crore term insurance is an ideal amount since term plans are available for varying tenure at very affordable premium rates. For young wage earners, a 1 crore term insurance is a suitable option as you can avail of maximum benefits at very low costs. However, if your net worth is higher, and your loved ones require larger settlements to meet their financial goals, then a 5 crore term insurance may be better suited for your needs.
If you survive the policy tenure of either a 1 crore or 5 crore term insurance and opt for maturity benefits, then the lumpsum amount can help you cope with financial distress. The premiums accumulated over the years serve as an excellent savings plan.
