Life is unpredictable but it is important to create a safety net for your loved ones in case of your absence. Life insurance schemes in India are becoming widely popular as they offer financial security to insured individuals for their loved ones.
Term insurance is a type of pure life insurance providing financial coverage up to a certain amount to safeguard the interests of the insured. Over the past few years, 75 lakhs term insurance has gained popularity as a reliable scheme given the rising expenses in the country. Let’s dig deep and evaluate whether a 75 lakhs term insurance is adequate.
What is a term insurance?
A term insurance is a life insurance offering financial support to the bereaved family in case the insured individual dies within the policy tenure. The sum insured is provided against premiums paid monthly, quarterly or yearly, or in some cases, a single premium. To better understand term insurance, let’s take a simple example:
Akash Sinha a 29-year-old bank employee opts for a 75 lakhs term insurance for a tenure of 30 years. In case Akash dies within 30 years, his wife who is the policy nominee will get ₹75 lakhs as a death benefit. However, if Mr Sinha survives the 30-year term, the policy will come to an end.
75 lakhs term insurance: Concept and benefits
A 75 lakhs term insurance is an insurance plan where the insured individual gets ₹75 lakhs as a death benefit in case the insured dies within the policy’s tenure. Remember that the amount under this type of insurance is fixed but there is flexibility to choose the tenure. The primary purpose of purchasing a 75 lakhs term insurance is simple: Safeguarding the financial interest of the insured.
Let’s take a look at the benefits of 75 lakhs term insurance in detail:
- Comprehensive coverage
75 lakhs is a substantial amount implying that you will be getting comprehensive coverage to ensure that your family members can easily meet their numerous expenses. The death benefit under a 75 lakhs term insurance can help pay off debts, liabilities, education expenses etc. Note: Before you zero in on a policy make sure you understand and qualify the term insurance eligibility criteria.
- Affordable premiums
Term insurance is widely popular primarily because of its flexible and affordable premiums. Purchasing a 75 lakhs term insurance can become economical when done at a young age. Additionally, there is flexibility in choosing the premium payment method and tenure.
- Option for riders
In addition to offering death benefits, insured individuals can also opt for additional coverage for medical needs like critical illness, accidental death, permanent disability etc. These add-ons can be attached to the existing plan with a minimal increase in premium paid.
Is 75 lakhs term insurance enough?
A 75 lakh term insurance offers comprehensive coverage in case the insured passes away. The sum insured can be utilised for multiple purposes like paying off any outstanding debts, marriage and education expenses of dependents, everyday expenses etc.
However, it is for you to decide whether the sum insured is enough. The adequacy of insurance amount varies depending on various factors that you must consider to find the right amount. Here’s a list of considerations to keep in mind:
- Financial dependents
The thumb rule of choosing term insurance is to factor in your financial dependents. If you are liable to support the education and marriage expenses of family members, you must evaluate education and marriage inflation to choose the right amount.
Did You Know? The education inflation in India is rising twice the inflation rate. 1
- Living expenses of your city
Another factor that plays a major role in deciding is the living expenses of your city. This is to ensure that even in your absence, your family members are meeting their everyday lifestyle needs smoothly.
Did You Know? The cost of living in rural India was ₹3,773 and ₹6,459 for urban India in 2022-2023. 2
- Debts and liabilities
List down all the debts you owe like home loans, car loans, personal loans etc. This will help you analyse whether a 75 lakh loan would be enough to pay off your debts without creating a financial burden on your loved ones in your absence. In case it doesn’t, you need to consider a bigger coverage amount.
The bottom line
The key to choosing the right insurance depends on various factors that must be considered to leverage comprehensive financial coverage for the insured. Make sure to check term insurance eligibility criteria.
Remember that one policy cannot suit all and therefore you must perform research to find the right plan. A 75 lakhs term insurance promises comprehensive coverage making it a reliable option for many, make sure it does the same for you.
