Term Insurance Plan is a Good or Bad?
Term Insurance Plan Means Best Insurance = Cheapest Insurance
The meaning of a Term is a Specific Time/Period.
For Example, if you have taken a term insurance policy for 75 years the insurance company would pay you if you died till 75 years of age and if you survived till 75 years then the insurance company will pay you nothing,
So, you will think that it is the worst Insurance product.
But trust me it is the best Insurance product and if you don’t understand its basic concept then every Banker and every agent will sell you a useless insurance plan, and end up buying a worthless insurance policy.
Let me explain: Imagine
- your age = is 38 years old and assume that
- your salary = is 12 lakhs per annum,
- and you keep investing 2 lakhs rupees for the last 10 years [28-38 years]
- you are married, and your first baby was born when you are 30 years old, and 2nd baby on 33 years old.
- your Total expenses including food, clothing, fuel, electricity, and fees = are 10 lakhs rupees.
Scenario 1: Just Imagine that at 38 years of age, you died, so for the past 10 years, you keep investing money of rupees 2 lakhs gives you a return of @12% yielding a total amount of 39 lakhs in the 38th year [ that too is the maximum return]
So just tell me if your family expense is 10 lakhs then 39 lakhs rupees is not enough to feed your family for 4 years.
Scenario 2: But let’s say you didn’t die at 38 years of age and survived till 75 years then your investment amount of 2 lakhs @ 12% interest every year will result in 7.5 crore so if anything, happen to you after 75 years then your family will have 7.5 crore will them. So, now you don’t need life insurance.
Scenario 3: let’s suppose your investment doesn’t yield you 7.5 crore rupee but your children have grown up till you attend 75 years of age and they are now earning as well, so now you don’t have any dependent on you rather your dependent can support you now, so you don’t need life insurance.
# Assuming your children don’t turn out to be worthless and if so then you and your partner can support each other as you have built enough money till your retirement.
So, in short, after 65 or a maximum of 70 years of age, you don’t have any reason to have a life insurance policy.
Life Insurance means protection, protection from my age when I am building my wealth and assuming that I will continue to build my wealth and if anything, happen to me before I built enough wealth then life insurance can save my family but if I build my wealth which is enough to support my family then what do you do with that life insurance policy?
So that is why term insurance is the best insurance policy.