Picture a peaceful night at home, surrounded by your family. You delight in seeing your family safe, as you are the main provider of income for them. Yet, a tiny doubt may arise in your mind: “What if I am no longer present tomorrow, what will happen to them?”
That is the kind of scenario where life insurance steps in to be of help. In fact, a term insurance plan is the most straightforward means for ensuring your family’s security. It provides a substantial sum of money to your family members in case you pass away and thus stop being the provider.
We have heard a lot of people advising a 2 crore term insurance cover recently. But is it just an impressive number or a real requirement? We will simplify this for you so that you can easily make your decision.
Explain a 2 Crore Term Insurance Plan.
Simply put, a 2 crore term insurance plan is a straightforward, no-frills agreement between you and an insurance company. You commit to paying a specific amount of money at regular intervals (either annually or monthly). This amount is called the premium. In exchange, the insurance company commits that if you die during the term of the policy, they will pay the sum of 2 crore rupees to your heirs.
Your family can use this compensation to maintain their standard of living, clear any outstanding home loans, or even cover the cost of their children’s higher education. This is a pure and simple protection measure against bad luck. If, however, you outlive the policy term, the plan simply expires; you will not receive any money back unless you opt for a particular “return of premium” plan.
Reasons Why A 2 Crore Cover Is Justified On Your Part Today
It was a different ball game some years back when Rs 50 lakhs or Rs 1 crore looked like a huge amount of money. But things are changing super fast. Life in India is getting costlier every single day. Here are some reasons why a higher cover has become the new reality:
- The Peril of Inflation: Inflation means that things get more expensive over time. For example, a grocery bill for Rs. 10, 000 today may double to Rs. 20, 000 in ten years. A Rs. 2 crore term insurance payout guarantees that even after twenty years, your family can afford to buy the same food, clothes, and medical care.
- Big Modern Loans: Most young people in India buy their first homes very early. Home loans in India often amount to lakhs or crores of rupees. If one is not around, that loan becomes a big problem for parents or a spouse. This insurance cover can be used to pay off all debts immediately.
- School and College Expenses: Higher education is our biggest investment. Whether it’s an engineering course, medicine, or an MBA, the cost is going up. A large cover secures your child’s bigger dreams.
Understanding When You Should Opt for 2 Crores
There is no need to randomly guess the amount of insurance that you require. There is a simple rule of thumb that is followed by experts. Your term insurance cover should be at least 10 to 15 times your total annual income.
Let us look at a quick table to see where you fit:
| If Your Annual Salary Is | Your Ideal Protection Cover | Is 2 Crores Right? |
| Rs. 5 Lakhs to Rs. 7 Lakhs | Rs. 50 Lakhs to Rs. 1 Crore | It might be too high for now. |
| Rs. 10 Lakhs to Rs. 15 Lakhs | Rs. 1.5 Crores to Rs. 2 Crores | Yes, it is the perfect amount. |
| Rs. 20 Lakhs or More | Rs. 2.5 Crores to Rs. 3 Crores | You might need even more than 2 crores. |
Besides your salary, also consider your life stage. For example, a 30-year-old married person who has a toddler and a home loan definitely needs a 2 crore term insurance plan. Whereas a 55-year-old individual, whose children are independent and with no loans might not require such large insurance coverage.
Surprisingly, It Is Very Affordable!
People generally think that a big insloans,e cover like Rs. 2 crores will be very costly. They fear that it will make their monthly budget difficult to manage. But term insurance is actually the most inexpensive form of life cover in the market. Since it neither invests your money in stocks nor offers maturity benefits, the full premium goes towards the life risk cover in case of death.
Take a 25-year-old healthy non-smoker, for instance; such a person can get a Rs. 2 crore insurance cover for approximately Rs. 1,200 to Rs. 1,500 per month. Living in a metropolitan city, it is almost the same as the dinner for 2 or the movie tickets!
Younger the age, the better the rate you get. Also, after purchasing the policy, you don’t have to pay more your premium is the same till the end of your life. Hence, starting early is a very wise financial decision indeed.
Three Things to Check Before Buying
While purchasing the cover, consider these factors:
- Claim Settlement Ratio (CSR): It shows the share of claims paid by the insurer out of every hundred claims filed. Choose an insurer with a CSR of at least 98% to be absolutely certain and at ease.
- Be Utterly Honest: While filling out the application, do not conceal your habits like smoking or drinking and always disclose the past medical conditions. Being truly honest is a sure way to ensure that your family can collect the money effortlessly without any possible refusal later on.
- Select Payout Options Carefully: You can elect your family to receive a single lump sum or a combination of a lump sum and monthly income. Monthly income choice is excellent if your spouse or parents are not familiar with handling large amounts of cash.
Conclusion
Accruing a 2 crore term insurance plan is neither a luxury nor a sign of one’s social status. It is a thoughtful and sensible gesture of love towards one’s family. The plan acts as a safeguard for your family’s aspirations, their house, and their joy even if life throws a curveball. Get together with your family today, assess your earnings and liabilities, and make the decision that will secure their future in the best way.
