How To Determine The Right Sum Assured For A Term Insurance Plan?
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Purchasing a term insurance plan is not as easy as it seems. Before purchasing one must consider certain factors that will determine the right amount of coverage he/she requires according to his/her expenses, liabilities and responsibilities. Sometimes a person chooses a plan which has low premium rates and isn’t sufficient for a person’s coverage. To purchase a term plan one must evaluate factors such as number of dependents, income, liabilities, savings, medical history etc. to determine the amount of coverage he/she may require.
How To Determine The Right Sum Assured For A Term Insurance Plan?
Below mentioned are some factors that one must consider before purchasing a term insurance plan:
1. Consider your Financial Goals
There are different requirements of a person at different stages of his/her life which require financial planning and assistance, these requirements can be marriage, higher education, retirement etc. Hence, it is advised to take a sum assured plan considering the future financial goals you need to achieve. It is advisable to choose a sum assured that is 10-15 times the annual income of the life assured, so that his/her family is able to achieve long term financial even in life assured’s absence
2. Evaluate your Future Expenses
The main purpose of purchasing a term insurance plan is to ensure that the family is provided with financial support that they require in the absence of the life assured. This way the life assured can ensure that his/her family is financially protected and is able to meet their expenses even in life assured’s absence. The life assured must choose a sum assured keeping in mind that his/her family can maintain a healthy lifestyle.
3. Consider your Savings and Liabilities
Before choosing a sum assured for a term insurance plan one must calculate his savings and liabilities to make sure that your family is not bothered financially. One must ensure that their family is provided with the financial assistance that will allow their family to fulfil their lifestyle requirements and goals without any compromises. It is very important to evaluate current financial needs and liabilities before finalising a sum assured.
To Conclude
Term insurance helps you provide financial security to your loved ones in difficult times but before purchasing you must choose a coverage amount that will help your family financially in case an unforeseen event takes place.
Also read - Why is Life Insurance Always a Smart Decision?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
