Why and when do you need Term Insurance?
Term insurance is the simplest of all insurance products.
You buy Term insurance because you love your family. You want them to be financially secure once you have moved on.
This product has no financial value for you. You buy it because you want to leave something as a parting gift.
It is a product that buys you mental peace. Please read my previous article on the genesis of life insurance.
When should you buy a Term Insurance?
Term insurance should be bought on the following trigger events.
- You get married
- You welcome a little one in your family
- You take a significant mortgage like buying a house or even a car
Why think of life insurance on happy occasions? Why, because these happy occasions are reminders that raising a family is one of the joys of life and it takes conscious effort to maintain one.
Life happens. Time passes by more quickly than you think. There is no perfect time to do anything. These events are good reminders and should be treated as is — life nudges.
Why buy term insurance when I do not get any money back?
Term insurance is a means to make your family’s life secure when you are gone. It is a product that can secure your family’s future. You are not buying for yourself.
If you are living only for yourself, this is not a product for you!!!
Do I keep adding new term insurance plans as life event happens?
This is difficult to answer with a simple “Yes” or a “No”.
Term insurance plans get expensive as you grow old. So the term insurance purchased when you got married say at 28 will be cheaper than when you took a mortgage when you were 35.
Further, as you grow older, you may have to deal with minor or major ailments. This will be partly due to your life habits, mother nature, or genes. Buying life cover when you have been diagnosed with a disease would be expensive or in some cases even denied.
If paying term insurance premiums is not hurting you financially, you should keep it as long as possible.
Plan your finances through an advisor
The insurance industry has innovated over decades and has a suite of products to meet different needs.
For example, as we start paying off our mortgage, our debt liability decreases with time. We can buy a decreasing term cover that can match the loan term and is usually cheaper than a standard term product.
Insurers also offer the option of converting a term cover into a whole life cover.
Find a good financial advisor, plan early & simplify your life.
I work for Sun Life, a Canadian insurer. However, these views are personal and can not be attributed to my current employer. The article's purpose is to provide awareness and education.
