You have always dreamt of giving all the happiness of this world to your family. But, your dream was always clouded by a dark reality.

The reality is that if something happens to you, no one is there to support your family after you. It’s not just about the emotional breakdown your family will go through, but also about the financial difficulties they will have to face, assuming you were the only breadwinner of your family.

The above scenario describes exactly how one’s family’s life can turn out to be after him if there’s no term insurance plan.

A sub-category of life insurance, term insurance refers to a plan that involves paying a certain premium amount for a particular term. If something happens to you within that term, your family will be paid a coverage amount.

It acts as a major financial support, especially when you are not there to support your family financially.

But, merely buying a policy won’t help your family. Determining the term coverage you need is also important.

Let’s understand this procedure with an example.

Suppose your annual income is Rs. 4 Lakh. You want term insurance coverage for a term of 20 years.

Thus, it turns out that you should buy term insurance, which provides you coverage of Rs. 80 lakh or more.

The above calculation proves to be more beneficial when you opt for a pure-term plan. Going for an investment plan or even choosing a rider of “Return of Premium” (the policyholder is paid back the premium amount if he survives the policy term) is not a very smart move, as they only increase the amount of premium to be paid by you.

Choosing a term plan also helps you financially, as term insurance premiums are tax-deductible under section 80C of the Income Tax Act. Under Section 80C, you can claim deductions of investment and expenditure up to a maximum of ₹1.5 lakh in a financial year. This limit covers a number of premium payments, including term insurance premiums, EPF, PPF, NSC, etc.

We see a lot of cases every day, where the absence of term insurance ended the families in a serious financial crisis. In some cases, families were left with not only the responsibility of current expenses but also the burden of paying off various borrowed amounts.

But, there are other cases as well, where a correct decision at the correct time helped the family in difficult situations.

Now, it’s up to you which situation you want your family to be in, after you!