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By Deepak Sharma
Term insurance is the simplest form of life protection. You pay a small amount regularly. If you die during the policy period, your family gets a large sum of money.
It's pure protection. No savings. No investment. Just financial safety for people you love.
It is just like car insurance. You pay for protection. Hope you never need it. But if something happens, it's there to help.
Now that we have understood “what is term insurance?”, let’s see how it works. Term insurance works in a simple way.
You can choose how much you want as cover. 50 lakhs, 1 crore, or 2 crore. Then you pick how many years you need protection. Usually 20 to 30 years. You pay premiums monthly or yearly. This continues for the chosen period.
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If you die during these years, your family receives the full amount. They can use it for daily expenses, loans, children's education, and other needs.
If you survive, the plan ends. You paid for peace of mind and protection throughout.
Due to the uncertainty in life, nobody really knows what tomorrow brings. Term insurance prepares your family for the worst.
Key reasons to buy:
● Your family depends on your income. If you're gone, how will they manage?
● You may have loans. Home loan, car loan, personal loans. Someone needs to repay them.
● Children's education costs lakhs. Your spouse alone might struggle to afford it.
● Daily expenses continue. Rent, groceries, and bills don't stop.
● Medical emergencies can happen. Having backup money helps tremendously.
● Term insurance ensures your family doesn't suffer financially during already difficult times.
Why would someone need 2 crore term insurance? Isn't that too much?
Not really. For many families today, 2 crore makes perfect sense.
You need high coverage if:
● Your annual income is 15-20 lakhs or more. Coverage should be 10-15 times your yearly earnings.
● You live in expensive cities like Mumbai, Delhi, and Bangalore. The cost of living is very high there.
● You have big loans. A home loan of 80 lakhs-1 crore is common in metros.
● Multiple children need an expensive education. Each child's college can cost 20-30 lakhs.
● You want your family to maintain its current lifestyle. Not struggle or compromise.
● For upper-middle-class families, 2 crore coverage is actually quite reasonable.
Why do premiums differ from person to person? Several things matter.
● Age: Younger people pay much less. Every year you wait, premiums increase.
● Health: Good health means lower rates. Existing diseases increase cthe ost significantly.
● Lifestyle: Smokers pay almost double. Heavy drinkers also pay more.
● Occupation: Risky jobs like mining cost more. Desk jobs get better rates.
● Gender: Women usually pay slightly less than men for the same coverage.
● Policy term: Longer terms have higher total cost but lower yearly premiums.
You can't change age. But you can improve your health, quit smoking, and buy early to save money.
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Getting 2 crore coverage is one thing. Getting the right plan is another.
What makes a plan good:
● High Claim Settlement Ratio: This is most critical. Check how many claims the company actually pays. Above 98% is excellent.
● Company Reputation: Old, established insurers are safer. They've been around for decades. Less likely to cause problems.
● Premium Cost: Compare prices across 4-5 companies. The same 2 crore cover can differ by 20-30% in cost.
● Policy Features: Some plans offer better flexibility. Option to increase cover later. Option to extend term.
● Customer Service: Your family will deal with them during tough times. Helpful service matters then.
● Financial Strength: The Company should be financially stable. Check their credit ratings.
The best term insurance plan for 2 crore balances all these factors well.
When comparing plans, check these features carefully.
● Life Cover: Obviously 2 crore. But confirm this clearly.
● Policy Term: How many years of protection does the policy provide? Choose till retirement age usually.
● Premium Payment Term: Can be the same as the policy term or shorter. Limited pay options available.
● Death Benefit: Lump sum or monthly income option for the family. Choose what suits you better.
● Rider Options: Can you add critical illness cover? Accident benefit? These add value.
● Grace Period: How many days do you get for a late premium payment? Usually 30 days.
You now understand what term insurance is and why it matters. You know when 2 crore coverage makes sense. For high-earning professionals and upper-middle-class families, finding the best term insurance plan for 2 crore is crucial for financial planning. Most importantly, ensure your family knows about the policy. Keep documents safe and accessible.
Your family depends on you. Give them financial protection. The peace of mind is worth every rupee spent. Get your 2 crore term insurance sorted this month.
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