If you are not sure about a term insurance need, then you are not the only one. Many people have this same question running in their minds when it comes to buying a term insurance policy. So, our rationale will definitely help you to decide in case you require an online term insurance plan or not.
Insurance service providers believe that policy is a function of policyholder’s financial liabilities. Those who have limited assets to protect your financial liability, then you don’t really need to spend money on this type of insurance. But, the only question is how do you come to know about your financial liability?
Person needs to consider what kind of financial responsibilities such as child education, marriage of children etc and financial goals his family will have, when he is not around.
It is a sum total of all amount which your spouse will require for monthly household costs between today and end of your spouse’s life, adjusted for inflation and expected return, net of tax. Generally, insurance experts suggest a life expectancy of 85 years.
You can do such calculations by using present value formulas in excel or just consult with a financial planner. Once person know how much his family will require when he is no more around his family. Therefore, total up the sum assured in life insurance policies and do not forget to check if employer has any term coverage for employees.
Remember to estimate the net assets’ value which you own. Always exclude the consumption assets such as gold jewelry, house etc while doing this calculation. Now, cut down outstanding liabilities from this to calculate net assets figure.
Make sure to include existing values of your pension accounts. Here, a critical assumption is that financial assets will be liquidated by the policyholder’s family as and when required to fulfill the financial needs. You must know about how much your spouse will require and he or she will have.
Consider your investment and spouse’s profile at home and involve him or her in insurance corpus. Carefully balance between the need to cover the financial risk and the insurance cost.