If you have dependents, you most definitely need term insurance are more likely to benefit. But do you need term insurance if you have no dependents?
Term life insurance plans are beneficial. They help you build up a corpus over a long period in a very economical manner. But does everyone need a term plan? Perhaps not. This is because like all other kinds of insurance, term insurance is also specific to the needs of an individual. In this article, we talk about the insurance needs of people and explain who needs term insurance and who doesn’t. Take a look.
Term insurance needs
First and foremost, we have to understand how a term plan works and helps the policyholders. A term plan is a pure form of life insurance where you get a sum assured upon the death of the policyholder. There is no return component if the policyholder outlives the policy term. A term plan helps you to build up a corpus for your loved ones. Term plans are usually taken for long durations, and so you pay a small premium every year which makes the plan very affordable too.
Term insurance – who needs it
Term insurance is best suited for those who have dependent family members. If the person is a primary breadwinner, the term plan becomes a prospective income replacement tool. If the policyholder dies unexpectedly, the death benefit received from the term plan can help the family deal with its financial responsibilities.
A term plan is ideal for someone who is employed and has a steady source of income. The premiums of the term plans are not very high and are pretty affordable for most people.
Young people, at all cost, need term plans. This is because of a young person, who is starting his career, gets a long time to build up a healthy corpus. His health is also good, and this makes the plan more reasonable for him.
Term insurance – who doesn’t need it
Now let us look at cases where the people don’t need term insurance. A person who is very rich, a high net-worth individual, may not require a term plan. Such a person would have a fund already built up, and if anything were to happen to him, his family could use the savings available to them.
A retired person or a person above the age of 65 may also not benefit from a term plan. This is because term plans cost a lot when you are older and have specific health issues that age brings along. Also, a senior citizen usually doesn’t have too many dependent family members to worry about. A pension plan is more suited for such a person than a term insurance plan.
Lastly, a single person, who doesn’t have any dependents to worry about, and has a good health insurance plan, may not need a term plan. Since the sole goal of a term plan is to provide for your family in your absence, a single person will not find such a plan to be useful.
In a nutshell
To put it in a nutshell, therefore, everyone does not need term life insurance. While a term plan can prove to be extremely useful, it can become redundant and a liability if taken without a proper purpose. So analyse your life insurance needs. Do not forget that insurance is not a “one-size-fits-all” commodity. You don’t need a term plan just because your brother has one. So, see where you stand in life, what your responsibilities are and how your financial health is before opting for a right term life insurance plan.