As of December 2014, Rs. 16,380 crores were borrowed as loan in Tamil Nadu through 9.56 lakh student accounts, while Rs. 10,487 crores were disbursed in Kerala for 4.03 student loan accounts. Both these states accounted for 40% of the country's total education loans. Collectively, Rs. 70,475 crores were disbursed all over India in the same year.
The picture is clear, Indian parents want the best of education for their children and are ready to go to any extent for that. However, this may not be your only debt in life. Along with this, you might also have a car loan or a home loan to repay.
Now consider a situation where something unexpected happens and your kids are left with the burden of these debts! A responsible parent not only borrows money for their child's better future but also has a plan for its repayment.
Unplanned Situations that can Make Life Tough
- Road Accidents: Over 137,000 people were killed in road accidents in India in 2013, which was more than the total number of people killed in all the wars combined. About 16 children die every day due to these accidents, with one person losing their life every four minutes. In most of these cases, the mistake is not even of the person who has to face the consequences. A term plan makes sure that your family gets financial support in case you meet with an unfortunate event on the road.
- Natural Disasters: One thing that nature has taught us over the years is that it is very unpredictable. From the North Indian regions of Uttarakhand to the southern city of Chennai, floods have claimed thousands of lives. Earthquakes did the same in Gujarat, while Bengal was hit by famine. It doesn't matter which part of the country you live in, there is always a chance of falling victim to a natural calamity. You may not have any control over it but you can surely reduce its impact by planning your investments well.
- Adventure Sports: The sky is the limit when you are into high-octane adventure sports but the lack of facilities and infrastructure in India has resulted in some tragic incidents in the recent past. In fact, the Goa government had to shut down all water sports activities early in 2016, after a tourist lost his life while para-sailing at Colva.
What is Term Insurance?
Life throws many difficult challenges at you but that doesn't mean you have to stop. As they say, the show must go on, but before putting your foot to the peddle, make sure you fulfill all your responsibilities.
The best way to ensure that your family is not left behind with the burden of your debts is by opting for a term plan. It is basically a protection plan for your family against your unforeseen demise. Under this policy, you get coverage for a fixed period of time under a fixed rate of payment.
The tenure of a term policy is less than that for an endowment policy and if the person who is insured dies during this tenure, the amount is paid to the beneficiary.
However, if you outlive the period of the insurance policy, you get back the amount you paid as premiums but nothing more. It is the most effective and cheapest way to provide financial security for your family.
Benefits of Term Insurance
It gives you many advantages over the traditional life insurance plan, such as:
- It is the cheapest possible insurance plan. The amount of premium that has to be paid is comparatively lower than what you may for the other life insurance policies but the returns are almost similar, making it highly effective too.
- You have the power to select the term of coverage. You can identify a time period you feel will help you reap the most benefits from this type of insurance and pay the premium only for that period.
- Unlike some of the other policies, the premiums are fixed and do not increase with time or circumstances.
- You also have the option to customize the term plan with additional riders, such as child or waiver of premium.
- Although the premiums paid are lower, you are still eligible for tax benefits under section 80C, just like an endowment policy.
- In case you outlive the term of the policy, the entire money you paid is returned, although without any benefits. So, it is a win-win situation for you in any case.
- It can also be used as collateral or security to take personal loans.
You can look for various online term plans to gain added premium benefits. Not matter how much you have saved or invested over the years, sudden calamities can always have a drastic impact on your family. So secure the financial future of your family now!