A 50 Lakh Term Plan entitles the nominees to receive an amount of INR 50 lakhs in case the policyholder dies. This amount will help the family members of the insured in his absence to meet routine expenses, maintain their lifestyle, pay off liabilities, etc. This plan offers affordable & substantial coverage to policyholders’ family members, hence offering financial security. Choosing the best term life insurance ensures not only adequate coverage, but also low premiums, riders, flexible tenure, etc.
Let us now understand the concept using an example:
Mr. Vimal is a sole-earning man in a family of 4 people, i.e. a wife & two kids. He bought a term plan with a coverage amount of INR 50 lakhs & a policy tenure of 20 years.
Situation I: Mr. Vimal dies during the policy tenure
If he dies within 20 years, his wife, i.e. the nominee, will receive the sum assured of INR 50 lakhs. This amount will help her meet expenses, pay off debt obligations, etc.
Situation II: Mr. Vimal outlives the policy tenure
If he survives the policy tenure, no maturity benefit will be received.
Benefits of INR 50 Lakhs Term Plan
Provided are the benefits of buying a 50-lakh term plan:
- High Coverage at Affordable Premiums
This plan offers high coverage as high as INR 50 lakhs at an affordable premium in comparison to other term plans.
- Financial Security for Family
This plan helps to provide financial security, maintain a lifestyle, pay off loans & debt obligations, & meet routine expenses, etc., in the absence of the policyholder.
- Tax Benefits
The premium amount paid is eligible to receive a deduction of tax u/s 80C & the death benefit received is exempt from tax u/s 10(10D).
- Flexibility
This plan offers flexibility in payment of the premium amount, i.e. monthly, quarterly, semi-annually, or annually.
- Riders &Add-ons
It offers additional riders to enhance the features of the term plan, like critical riders, waiver of premium, accidental death benefits, etc.
- Mental peace
Knowing that the family members will be financially secure in your absence provides mental peace.
- Transparency
These plans are simple to understand, with easy terms & conditions.
- Simplicity
This plan is easy to understand& straightforward, with the main objective of protection & not investment.
- Loan Protection
It secures all your outstanding debts & liabilities, leaving your family members financially secure in your absence.
Who Should Buy a 50 Lakhs Term Plan?
Provided are the individuals who should consider a 50 lakh term insurance:
- Individuals looking for financial protection against debts
In case the policyholder has availed a loan to buy a new car, a new house, marriage, education, etc., the term plan provides financial security at times of unforeseen events. This means individuals with home loans should consider term insurance, which will not overburden the family if the insured dies.
- Pre & Post-Retirees
A 50 lakh insurance can help pre- & post-retirees manage children’s education, marriage, home loans, etc. This plan helps take care of the basic needs of the policyholder & beneficiaries, ensuring optimum coverage & easing things out.
- Individuals looking for higher education
This plan can be opted for by individuals pursuing higher education, which is quite expensive. This plan provides assurance to the dependents that there will be no financial crunch due to educational loans in the unfortunate event of demise.
- Individuals looking for charitable contributions
Individuals with benevolent inclinations can buy a 50-lakh term plan to fulfil charitable contributions, ensuring mental peace & positivity.
- Individuals looking to supplement existing coverage
In case of an existing term plan from the old days, or if you are covered by the employer’s insurance plan, which now feels insufficient. In this case, opt for a 50 lakh term plan. This added coverage provides an extra protection to address the unforeseen events for the well-being of family members.
How to Choose the Right Coverage?
Provided are the steps on how to choose an appropriate coverage of a term plan:
- Assess Your Life Goals
Make an assessment of the financial objectives, i.e. children’s education, marriage, financial support, buying a house, etc. The coverage will depend on the life goal in terms of financial objectives.
- Consider Your Financial Liabilities
Assess the present debts, liabilities, & financial obligations. The sum assured of a term plan should be enough to cover the financial commitments towards the family members in your absence.
- Evaluate Your Health & Lifestyle
Evaluate your health, habits, & lifestyle to determine the insurance costs. For example, in the case of a smoker, the premium costs would be higher.
- Consider Your Estimated Working Years
Estimate the working years prior to retirement & ensure the coverage lasts till retirement to ensure the financial security of dependents.
- Use an HLV Calculator
It helps you ascertain the sum assured by considering factors like income, liabilities, debts, expenses, investments, etc.
Factors to be considered while buying a 50 lakh termplan
Provided are the factors that should be considered while buying a 50-lakh term plan:
- Financial Assessment
The sum assured should be determined by considering present needs, future expenditures, present liabilities,&the amount required. The plan should align well with your future financial objectives.
- Claim Settlement Ratio
The higher the claim settlement ratio, the greater the chances of claims being settled.
- Premium Affordability
Assess the affordability of the premium amount, i.e. whether it fits your budget or not. Choose a plan that best suits you after comparing different insurance providers.
- Term Duration
The policy tenure should meet the financial milestones, i.e. it should align well with the future financial obligations.
- Rider Options
Assess the additional riders available, such as critical illness, accidental death benefits, waiver of premium, etc.
- Exclusions
Check for the policy exclusions, which will help set up realistic expectations & help make informed decisions.
- Inflation Factor
While determining the sum assured, the inflation factor must also be considered.
Conclusion
An INR 50 lakhs term insurance plan is considered to be an affordable plan that provides substantial coverage, hence securing the family’s financial future. Knowing that your family will be financially protected in your absence offers mental peace & helps meet future financial goals.
