Why term insurance for individual person

Insurance as the name suggests provide assurance of payment of fixed sum of money in the event of unexpected loss against payment of some predictable sum of money called as premium. It is tool to hedge against the risk of contingency. Thus it transfers all the risk from the insured to the insurer or the insurance company for a certain fee. Hence, insurance policy allows individuals, businesses and other entities to protect themselves against potential losses and financial adversity in exchange of a reasonable premium.

Why Term Insurance: When an individual starts earning, he is expected to earn till the time he retires and his family is dependent on his income. With his recurring income and his savings, he fulfills his various financial goals. However, life is uncertain and an unfortunate event such as death or permanent disability can cease his capacity to earn. Hence every individual is required to protect his family against any unfortunate attached to his life so that his family continues to enjoy the same standard of living even if he is not alive.

 

Term insurance allows individual to take huge sum assured with small premium. For example: a 30-year-old man who wants to get his life insured for Rs.1 crore has to shell out only Rs.7,000 to Rs.8,000 every year to protect himself for next 30 years.