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All you need to know about term insurance plans

Have you ever been fascinated with the thought of going to Tomorrowland - the electronic dance music festival, hosted in Belgium? Or for that matter, a trip to Norway to see the mesmerising Northern lights? The very fact that they are in Europe, makes it a somewhat costly affair. But aspiration and fascination are strong drivers. Right when we think of such trips, we tend to pull out a calculator and extrapolate the amount of money we have to save per month to be able to make them happen. 

Also, most of us tend to be a little financially stretched after a big vacation. Sounds familiar? After every such vacation, we tend to think if we need to manage money differently, or probably save differently. There is also that part of us which will probably thinks that our parents were right in advising us to spend cautiously and save more for the future. The truth then dawns upon us, that in the event of any unforeseen event, now that we have spent large part of our savings on vacation, how will our loved ones be able to sustain themselves?

If you are managing your money well and can save enough, you can take that much wanted vacation without compromising on large goals of life like own retirement, child’s education etc. In the process, you will find a way to not feel the financial stretch, too. 

Buying a term insurance contributes towards helping you get over the fear of the financial well-being of your family, after you. A term insurance is the cheapest and most effective way of ensuring that the future of your loved ones is protected even after you are gone.


But don’t buy it out of fear: Most of us tend to buy these products out of fear. The truth is, these products should be bought for pride. The pride of preparing well in advance and having the financial future of your family covered even without you. Live with peace of mind after this purchase.

How does term insurance work? 

On an average, for a monthly premium of around Rs 600, starting at the age of 30, an individual gets a cover of around Rs 1 crore.  While you don’t get the money back at the end of 30 years, in the eventuality of your death, any time after the first premium paid, your family stands to get Rs 1 crore.

Why is there no return on this product? 

Do you get a return on your car or bike insurance? It is a fee taken by the insurance firm to pay for the damages caused in the eventuality of an accident. Similarly, think of the annual premium of a term insurance as a fee taken by the insurance firm, against a promise that they will ensure the financial independence of your family under unforeseen circumstances.

Are there more reasons to buy a term insurance ? 

Yes. A few decades ago, term insurance did not exist as a product. Therefore, our elders/parents tended to save more for the future and to protect our future. But if the death arrived early, all their savings plans came to naught. It is beneficial to have a financial product that covers the future at a small annual fee.

What should be the value of my term insurance cover?

Typically, 10-12 times of your current CTC.

Where should I buy?

Most term plans can be purchased online or through a trusted life insurance agent.


The author is the Senior Director and Chief Operating Officer at Max Life Insurance.

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