What is it?
A term plan is an Insurance plan which covers your life and in case of death gives the amount to your nominee assigned as per the policy and amount is equal to the amount you have taken. I.e. if you go buy a term plan of Rs 50 lac for yourself and in case you die, your nominee will be paid 50 lac .So it’s a basic life insurance cover plan which pays back only in case of death and get no returns etc. So whatever premium you pay for this plan, you will get no returns but if you die then the cover amount will be paid.
Who should buy this kind of Term Insurance Plans?
All individuals who have dependants on them financially should buy this plan. This is a must for people who are bread earners in the family and has no assets or lesser cash assets.
How much cover should I buy?
Don’t get fascinated by 1 cr -2 cr term plans. Buy what you think is right for yourself. Basic rule is if you have any loans, the cover should cover all loans and 10 years of your family current expenses. I.e. if your family is dependent on you for 30000 per month and you have loan of 20 lacs, you should take cover of 20 lac (loan) + 30000*12*10=36 lac and buy a term plan of 56 lacs which will cover your loans and expenses of the family.
What should be my tenure or how long should be my term policy?
One should go for maximum period i.e. if a plan a is covering you till 75 years go for that plan as the longer the plan, it will help cover you at old age. If a premium of a plan covering you till 60 years is lesser and some other plan is higher, one should opt for term plan which covers you till maximum age.