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Why Buy a Term Insurance Plan with a High Cover?

A high-coverage term plan can provide more protection and benefits for you and your family. Plan ahead and invest in a plan with higher coverage with affordable premiums.

  • 5,420 Views | Updated on: Feb 27, 2024

Have you ever wondered how your loved ones will manage their finances in your absence? It is crucial to consider the future and how to protect your family financially in case of your untimely demise. That is where term insurance comes into play. A term plan can solve a financial crisis in case of your absence.

Key Takeaways

  • Term insurance is a safety net for your family. It can provide affordable premiums and death benefits to help your family in your absence.
  • A high-coverage term plan can cater to your family’s evolving needs, fight rising inflation, and offer enhanced protection with riders.
  • When buying a high-coverage term plan, consider the coverage amount, premium, policy term, riders, and insurer.
  • Consider your coverage amount, premium, policy term, riders, and insurer when buying a high-coverage term plan.

Term insurance is a golden ticket to your family’s secure future. It enables you to safeguard your loved ones and ensure their well-being at a time when you are not around to do so yourself. With several premium options in the market, it is advisable to go for a plan with higher coverage. This blog will discuss the importance of term plans with higher coverage and why you must buy one.

What is Term Insurance, and Why is it Important?

To put it simply, term insurance is a type of life insurance. But it is not your typical life insurance policy. Instead, term insurance provides coverage for a set period, or “term.” If something happens to you during this term, your loved ones receive a payout, also known as the death benefit.

Term insurance acts as a safety net for your family. If you are the primary breadwinner, it can offer affordable premiums and death benefits to help your family in your absence. It can replace your income, helping your family maintain their living standard, pay off debts, and cover daily expenses in the unfortunate event of your passing.

Why should you buy a High-Coverage Term Plan?

When buying a term plan, picking a policy with the highest life insurance coverage is advised. It not only translates to a high sum assured but several other aspects. Let us have a look at some term insurance benefits:

Cater to All Your Needs

While you may buy a term plan today, your family will likely use it many years from now. With time, their lifestyle, standard of living, needs, wants, etc., will evolve, and they will require more financial resources to lead a comfortable life as they do today. A high sum assured can care for their requirements and offer them the necessary funds to lead a dignified life.

Fight Rising Inflation

Inflation is constantly on the rise. The cost of education, healthcare, food, and other essentials has risen manifold in the last few decades. The coming years are expected to increase the prices of goods and services. Hence, the term insurance coverage you choose today should be sufficient in the present and hold its value in the future. Picking a high sum assured will ensure that your family gets an amount that can beat inflation yet be substantial enough to cover their needs.

Enhanced Protection with Riders

As stated above, high life insurance coverage is not limited to a high death benefit; it also contains riders that extend the scope of your policy. Adding riders, such as critical illness riders, permanent disability riders, accidental death riders, and more, can offer you and your family increased protection in times of need. They ensure that every unexpected scenario is covered under the range of your policy, and you never have to worry about anything.

Coverage for Longer Duration

Although each insurance provider and policy may have a different eligibility criterion, most plans offer long tenures to cover you for an extended period. The maximum age for the policy term can be up to 75 years. It ensures that your loved ones stay secure for more time.

Better Peace of Mind

The more flexible the plan is; the better term insurance coverage you can get. The ability to choose your payout options and frequency of premium payments must fit your budgetary requirements at the time. Similarly, a good term plan must offer the chance to customize the policy with riders and more. Picking a highly flexible plan is essential to lead a stress-free life with peace of mind.

What to Consider While Buying a High-Coverage Term Plan?

When buying a high-coverage term plan, it is important to keep the following things in mind:

Coverage Amount

Make sure the coverage amount is sufficient to meet your family’s financial needs in case of your untimely demise. A good rule of thumb is to choose a coverage amount at least 10 times your annual income. However, you may need to choose a higher coverage amount if you have significant debts, such as a home or car loan.

Premium

Term insurance plans are generally very affordable, especially for young people. However, premiums can increase significantly as you age and your health status changes. It is important to compare the premiums of different plans to find one that fits your budget.

Policy Term

The policy term is the length of time the policy will be in effect. Term insurance plans typically range in length from 10 to 30 years. Choosing a policy term that will cover you until you retire or until your children are financially independent is important.

Riders

Riders are additional benefits that can be added to your term insurance plan. Some common riders include accidental death benefit riders, waiver of premium riders, and critical illness riders. It is important to consider which riders are important to you and to add them to your policy if necessary.

Insurer

Choose an insurer with a good reputation and a strong financial track record. You can check the insurer’s claim settlement ratio to get an idea of how well they pay claims.

Way Forward

Term insurance is like a financial shield for your loved ones, providing security in uncertain times. It is affordable, flexible, and essential for anyone with dependents or financial responsibilities. Remember, life can be unpredictable, and while we cannot control everything, we can take steps to protect the ones we love. So, take a moment to consider your family’s future and explore the benefits of term insurance. It might be the best decision you ever make.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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