Term life insurance & should you buy it

Today I want to start my conversation with a quote by Michael J. Fox "Family is not an important thing, it's everything." 

We earn to fulfill the need of our family.  Do you ever think I we are not around how our family manage to fulfill their need? We are not around that does not means our responsibilities towards our family over. For this situation a there is a financial product called insurance plan. I mean insurance is not new thing in the world.  We saw our parents to buy Endowment policies. I personally feel that endowment policy is good for the Agents not for the policy holder. It is a total trap. So what is the better option? The answer is Term Plan.

Term Plan is a type of life insurance, provides coverage for a certain period of time or years. If the insured dies over the policy tenure a death benefit (or sum assured) is paid out. It is a very low cost product and specifically designed to secure your family needs in case of death or uncertainty. If policy holder survives for that term then there is no maturity benefit. Yes no benefit. 

You may say if we are not getting any sum after a term paying premiums every year, why should we invest in? My dear friends this is this is the insurance plan not the investment. We are paying premiums for the bad times and to be financially independent if we are no around. If we compare with endowment policies then it costs less than 5% for the same cover. We can have rest 95% in our hand which can earn better than our traditional policy.

Then main benefits are as follows…

Term insurance is suitable for a person with low income but requiring a large cover to protect his family's financial future in case of his demise. As per golden rule we must have 10 times of our annual income as cover. For example if your annual income is 2lakhs then you must have 20lakhs  as an cover. We should also increase it if our income increases.

Limitations of term insurance

• The premium for term insurance increases with age.
• Term insurance is not for wealth creation or any other goal as education of child or retirement etc.
• No maturity value.
• No surrender values.
• No loans are available under term policies.