Things to look out for when taking out term insurance

K. Aravind

It is part of financial planning to take out a life insurance policy to secure the future of those who depend on you. The responsibility of the policyholder does not end with taking the policy. Adequate coverage as well as sufficieny time period should be ensured.

Term policies to be taken out for life insurance. Do not take investment policies for any reason. But it was not just enough to take out a term policy. One also needs to look at whether it is adequately linked to the goals. The term of a term policy should be the period during which a person works and earns income.

It is rare for a man to take out a life insurance policy in the name of his housewife. This is because housewives do not generate income and other family members do not depend on them financially. But activities of housewives in a house cannot be ignored as having no economic value. Therefore, the cost of maintaining the home and caring for the children in her absense must be taken into considerationl. Therefore, taking out a life insurance policy in the wife’s name will further strengthen financial planning.

Doubts may also arise as to whether life insurance is required in the case of working couples. This is because husband and wife are not financially dependent on each other. But if one of the spouses dies, it will be difficult for the other to maintain the standard of living due to fall in income. If the two have taken out a joint loan, such as a home loan, it will become a liability. Therefore, both spouses need adequate insurance coverage even if they are working. The loan repayment amount should also be taken into consideration when deciding the amount of insurance.

Care must be taken to enter the nominee’s name correctly. If there is any change in the nomination, care should be taken to correct it in a timely manner. Unmarried people nominate their parents. Care should be taken to transfer it to the name of the life partner after marriage.

Another thing to keep in mind is to increase your life insurance coverage when needed. An unmarried person may not have the required life insurance coverage after he or she is married. The need for life insurance coverage will increase when you have children and take out a home loan. Accordingly, a new policy needs to be taken and coverage increased.