Why you should focus on 3Ds when buying term insurance?

In India, often people invest in term plans with the motive of tax-savings and not because of its primary purpose – financial protection of dependents. Everyone with liabilities and financial dependents are advised to invest in a compressive term insurance plan with adequate coverage and that protects you until your retirement age at least.

Rhishabh Garg, Head-Term Insurance, PolicyBazaar.com, says, “It may be an unpleasant experience for anyone to discuss death amongst family and friends, but then we all must accept the fact that death is a universal fact. While one may not be able to avoid death, but it is always wise to stay protected against unforeseen circumstances. While staying financially prepared against death is important, it is also important to plan for disease and disability as well. All these conditions can give a major financial pushback to a family with dependents.”

According to him, the sole purpose of term life insurance is to provide the dependents of the policyholder financial assistance in case of sudden death of the policyholder. Under term life insurance plan, the customer pays certain premium for a predefined term period against a chosen sum assured/coverage amount. This sum assured is paid out to the dependents of the policyholder on proper’s death. Asides to death, there are couple of important covers that term plans do provide in the form of riders/additional covers – disability and disease.

Why do we think disability is important? If you live until 65years of age, you are there to take care of your family. If you pass away at the age of 35 years and had a term insurance plan then, the payout from term insurance plan would take care of your family’s financial needs. However, what if you stay alive until 65 years but end up disabled at the age of 35years? In such scenarios, disability rider is what comes to your rescue and pays a lump sum amount that can be used to take care of your family’s financial needs to the extent feasible.

On the other hand, a critical illness/disease affects the financial future of one’s family in many ways. Probably three months of leave without pay followed by shifting to a lower stress profile which has limited growth path. Moreover, for those who do not have a limited health insurance coverage, they tend to get limited to a lower range of healthcare facilities for being treated that at times also lead to death while ability to spend on a better healthcare facility would have kept them alive. And cost of these riders or additional covers are very economical when compared to certain standalone plans. Thus purchasing a term plan offering critical illness benefits is strongly suggested.

Asides to this, it is suggested that people must buy a term plan at the earliest with many prominent studies warning about a possible third-wave. During the past waves, the process of physical medicals became slow, due to which the entire process of issuing term insurance was delayed. Usually, a term insurance issuance takes 4 to 5 days however, during the earlier waves the process took approximately 8 to 10 days. And if by chance someone gets affected due to Covid, they may have to wait up to 3 months to be eligible to get a term insurance plan which is a much larger risk to be under. To avoid such a situation it is best advised to buy a term plan at the earliest.