50 Lakh Term Insurance Plans for Young IT Professionals: Is It Enough?

Term insurance is an incredible tool to ensure financial security for your family. The term insurance benefits ensure that in the event of your passing, the loved ones you leave behind are financially sound and can plan their future with ease.

What are the types of term insurance for 50 lakh coverage?

The coverage of your term insurance policy will depend on your income vs expense ratio. You will need adequate coverage so that your loved ones can settle liabilities, pay for necessities, and have enough left over for a rainy day. For IT professionals, a 50 lakh term insurance plan can work wonders to ease your family’s financial stress.

A 50 lakh term insurance ideally pays INR 50 lakhs as a death benefit depending on the type of term plan you have. There are different types of term plans, which are as follows:

1. Increasing term plan –
   With these policies, you will be able to regulate the sum assured and meet the rate of inflation head-on. With an increasing 50 lakh term plan, the sum assured will increase every year of the policy tenure. Therefore, if you live a long and healthy life, the 50 lakh term insurance increases in value exponentially. In the event of your demise, your family will receive a settlement which will surpass the initial agreed-upon death benefit of INR 50 lakhs.
   
2. Decreasing term plan –
   If you need loans or financial aid, you can avail of the decreasing term plan. It helps you settle liabilities during the course of your policy tenure. Each year, the sum assured decreases by a predefined percentage or amount. The difference is used to pay back loans, mortgages, etc. Therefore, in the event of your demise, your beneficiaries will receive less than 50 lakhs term insurance settlement but at the same time, they will have fewer debts to worry about.
   
3. Single Premium Term Plan –
   If you have an unstable source of income, this type of term insurance plan is a good choice. It is also an excellent policy if you are good at financial planning. You will need to pay the premium once as a lump sum amount to lock your policy in place. In the event of your demise during the policy tenure, which can be from 10-99 years, as per your choosing, your beneficiaries will receive the death benefit that you initially agreed upon when purchasing the plan.
   
4. Level term plan –
   This is a simple form of the term insurance policy. The parameters of the plan do not change throughout the policy tenure. You can choose the sum assured, policy and premium tenure, and riders that you want to include. In the event of your death, your beneficiaries will receive the benefits as agreed upon in the initial contract.

How to determine if 50 lakh term insurance is enough coverage?

Determining the coverage required for your family is easy if you know what you need to cover. The basic household expenses should provide the road map for determining the ballpark of your term insurance benefits.

Ideally, you would need to consider the following:

1. Monthly expenses on household including utilities, rent (if applicable), etc.
2. Expenses towards vehicle payments such as instalments, insurance, etc.
3. Debts, loans, and mortgage payments.
4. Rate of inflation.

Based on these factors, you can determine if a 50 lakh term insurance is adequate coverage to take care of your family for a few months or if you need a higher sum assured.

Term insurance benefits

Term insurance plans are not only financial security for your beneficiaries in the event of your death but also an incredible means of financial planning during the policy tenure. Here are some term insurance benefits to bear in mind:

1. They are affordable life insurance policies available for very low rates of premium and for shorter as well as longer durations.
2. Based on your annual premium, you can reap term insurance benefits on taxes.
3. You can help contribute towards your family’s well-being and financial stability even when you are no longer around with the help of term insurance benefits.
4. You can choose to elevate the sum assured or decrease your debt with time with suitable term insurance plans.
5. If you are suffering from a critical illness, you can include riders to avail of treatment with the help of term insurance benefits.
6. If your demise is caused due to an accident, your beneficiaries can avail of accidental death benefits. These term insurance benefits would be applicable if you have the rider with your term insurance policy.

Term insurance benefits on taxes are not only applicable to the premium you pay but also to the death benefit and maturity benefit.

Conclusion

A 50 lakh term insurance policy is a remarkable financial plan to help your loved ones cope with their loss as well as navigate their finances. The amount is enough to help sustain your family for an extended period of time and aid in clearing liabilities and debts.