Why Get A Term Plan After A Large Loan

  Author: Naveen Kumar

You can’t buy everything you want from the savings made out of your income. This is especially true for big ticket purchases be it cars or homes. That’s why you need to take home loan, car loans and other loans. While different categories of loans are easily available, it is important to remember that large loan obligations make families financially vulnerable. Nowhere, is it more than in the event of the demise of the person whose pay covers the family’s expenses. So, how does one secure one’s family from this risk? One way is to buy a fresh life insurance plan. Ideally, it should be a low cost, high coverage, term plan. Here’s why you need the additional life insurance.

Family may be compelled to part with the asset In your absence and with the loss of regular income your family might find it difficult to maintain assets like home or car bought with an outstanding loan. That’s not to forget the burden of servicing EMIs. In extreme cases, they might have to part with something that you bought just for them and with great love.  A low cost, high life cover, term plan is likely to be all that is required to provide the protection.

Impact on future needs In the event of your untimely absence, even if your family has the money, servicing the loan will mean diverting the money from important future needs like child’s higher education. Additional life insurance from a term plan covering the outstanding loan amount prevents such a situation.

Why a term plan helps After taking a large loan, buying a term plan helps secure your family adequately at the lowest cost.For instance, you can cover a home loan of Rs 50 lakh with a monthly premium of Rs 600- 900, depending on your age and health factors. That’s not much to provide your family members the financial security they need.