Term insurance is a vital part of any family’s financial planning. Hearing that, the most obvious question you would have is how a term plan manages to do so. It can help protect the family’s future by paying off debts and provide a death benefit if the policyholder dies.

If you want to know in simple words what is term plan, it’s a type of life insurance policy that provides coverage for a specific term. However, that is not all there is to term insurance. Before you buy term insurance, it is very important that you understand the various nuances of a term insurance plan.

Term insurance and Dependents

Rakesh Verma is an employee of a legal firm who is at 35 years of age. However, he doesn’t have any dependents. Since the base function of term insurance is to make sure that your family is secure in the case of your sudden death, buying term insurance becomes confusing for Rakesh Verma. More precisely, does he need to buy term insurance?

A term plan is an insurance policy that is designed to protect the financial future of a family in case of any unforeseen event. It is typically not required for an individual. Moreover, a term plan does not provide any maturity benefit. Despite this, a term insurance policy is an important product to include in your financial portfolio. Here are a few reasons why:

Life changes

Simply put, your life will not stay the same as it is right now. You will have different experiences and responsibilities. The same can be said about dependents. At some point in the future, you might want to start a family or even get married. This is because it’s very important to have a family in order to maintain a good standard of living. Moreover, your parents will be getting older and will depend on you to take care of them.

There can only be enough time before you are faced with these responsibilities in life. At the same time, life is extremely uncertain and you cannot guarantee that you will be there to fulfill these responsibilities.

If you decide to buy a term insurance policy right when you meet these responsibilities, it will increase the insurance premium significantly. Hence, it is important to buy term insurance as early as possible. The earlier you buy the term plan, the lower the premium will be. You can always know about the premium to be paid using a term insurance plan calculator.

Helpful in case of Liabilities

Even if you do not plan on getting married, you will still have parents to consider. Imagine what would happen to them if they become financially responsible for the loans that you took out. That is exactly what happens in the case of your untimely death. In such a case, you surely do not want your parents struggling to pay back your liabilities. At the same time, you do not want your parents to lose the house that you bought or the car you gifted them. Hence, the only logical thing would be to clear all the liabilities. A term insurance plan helps with that. You can also find an online term plan. The payout from a term insurance is big enough to cover all your liabilities after your death. This keeps the stress from your parents in what would be a trying time for them.

Most people tend to ignore a term insurance policy as it is considered as another expense. Not having adequate insurance coverage can result in severe financial consequences. Regardless of your current situation, a term insurance policy is a great way to safeguard yourself and your family. It’s a protection plan that’s designed to meet the needs of your family. Whether you have a family right now or not, you need to think of financially protecting them.