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Purchasing new cars and homes or going on exotic vacations is the new norm for most of us today. They are the milestones to comfortable, happy living; however, without adequate savings, it can be difficult to accomplish all these wishes. This is where loans come to the rescue.
A loan is the most convenient way of enjoying all luxuries and comforts and fulfilling the wishes of your family members. However, every loan comes with a responsibility. If you are employed and earning well, you can easily repay the loan and continue leading a comfortable life without stretching your finances.
But have you ever considered what your family members would do in case of your sudden demise? How would they repay your loan in your absence? This is why you need a backup to ensure that all your Equated Monthly Instalments (EMIs) can be paid timely and that your family doesn’t face any financial turbulence after you.
A term insurance plan is the best option in this case. The benefits of term life insurance are plenty. Let’s look at some of them briefly here:
However, if you opt for the regular payout option, the beneficiary would receive payment for several years. This may serve as a perfect income replacement for your family and would help them repay home loans, car loans, or personal loans.
Every person dreams of buying their own house. To achieve this dream, several people take home loans. Since you need to pay EMIs on time, you must secure your home loan with a term insurance cover. If you took a hefty loan amount, it’s a good idea to choose a lump sum payout option for your beneficiary.
In addition, you should select a critical illness cover as your backup plan. If you’re ever diagnosed with a critical ailment like cardiac problem or cancer, you would be entitled to receive a huge amount from the insurer, up to Rs. 20-30 lakh.
Personal loans are small amounts borrowed to fulfill some personal goals/needs. You can therefore decide the payout options based on the loan amount and the time period.
In this case also, you may take a critical illness cover if you can’t work due to any critical ailment. Note that you’d need to pay higher interest rates for personal loans so always choose a backup plan to avoid high interest. You may consider opting for a cover of Rs 20-30 lakh for critical illnesses.
An education loan amount is generally smaller as compared to a home loan. This means that you can choose monthly payout options for your family members to repay the EMIs.
Again, your loan amount would be smaller for buying a bike so you can select regular payouts to pay EMIs. To repay your car loans, however, you can go for a combination of lump sum along with a regular income-payout option. In this case, you may receive 30-35% of the sum assured as a lump sum amount from the insurer.
Also Read: What Is Term Insurance with Limited Pay Option – A Detailed Guide
If you are a married woman, you can purchase a term insurance plan under the MWP Act. These days many insurers offer the benefits of buying term insurance online. Hence, you can conveniently purchase a term plan from an insurer’s website. The core objective of the MWP Act is to safeguard women’s properties from families, creditors and even husbands. According to the Act, the policy beneficiaries and trustees will receive the claim amount from the insurance company.
This is also known as a home loan protection plan that reimburses the loss against non-payment of EMIs (if the lender dies unexpectedly). Some insurance policies may offer riders like accidental death, disability, critical illness, and job loss under this plan. Although most plans provide single premium policies, some offer regular and limited premium payment terms.
If you have been thinking about “what are the benefits of term life insurance”, especially if you have a loan, then the above-mentioned information should help you decide. Know that it would be difficult for your family to manage all expenses along with repayment of loans in your absence. Therefore, choose term life insurance to ensure financial security for your family.
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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